ca final law amendments may’18|1 ca - final law … · (j) such other matters as may be...

CA FINAL LAW AMENDMENTS MAY’18|1

MAYANK JAIN CLASSES Contact No. – 9999044445 www.camayankjain.com

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CA - FINAL LAW AMENDMENTS – MAY 2018 EXAMS

AMENDMENT - 1

Rotation of Auditors

1. Section 139(2) – Rotation of Auditors

Neither a listed company nor any class of company as prescribed under Rule 5 of CAAR, shall appoint or re-appoint –

(a) An individual as auditor for more than one term of 5 consecutive years; and

(b) An audit firm as auditor for more than two terms of 5 consecutive years.

2. 1st Proviso to Section 139 (2) (i) An individual auditor who has completed his term under clause (a) shall not be eligible for re-

appointment as auditor in the same company for five years from the completion of his term;

(ii) An audit firm which has completed its term under clause (b) shall not be eligible for re-appointment as auditor in the same company for five years from the completion of such term.

3. Rule 5 of CAAR – Prescribed Class of Companies The class of companies shall mean the following classes of companies excluding one person companies and

small companies –

(a) All unlisted public companies having paid-up share capital ≥ `10 Crores;

(b) All private limited companies having paid-up share capital ≥ `20 50 Crores; [w.e.f. 22.6.2017]

(c) All companies having – Paid up share capital of below threshold limit mentioned in (a) and (b) above,

but public borrowings from financial institutions, banks or public deposits ≥ ` 50 Crores.

[As amended by Companies (Audit and Auditors) Second Amendment Rules, 2017 w.e.f. 22.6.2017]

4. 2nd Proviso to Section 139 (2)

As on the date of appointment, audit firm having a common partner(s) to the other audit firm whose tenure has expired in a company immediately preceding the financial year, shall not be appointed as auditor of the same company for a period of 5 years.

Illustration #3:

M/s RAJ & Co. is an audit firm, having partners Mrs. R, Mr. A and Mr. J, whose tenure has expired in the company

Kiran Ltd. immediately preceding the financial year. M/s Daljeet & Co., is another audit firm in which Mr. A is a

common partner. Therefore, M/s Daljeet & Co. will also be disqualified for being appointed as auditor of Kiran Ltd.

along with M/S RAJ & Co. for the period of 5 years.

Chapter 3 – AUDIT AND AUDITORS

Section 139 (2) & Rule 5



5. 3rd Proviso to Section 139 (2)

An existing company shall comply with the provisions of this sub-section within a period not later than date of the 1st AGM of the company held, within period specified u/s 96(1), after 3 years from the date of commencement of this Act.

[Existing Companies – Companies existing on of before commencement of Companies Act, 2013]

Illustration #4:

Mr. Raj, a Chartered Accountant, is an individual auditor of M/s Kundra Ltd for the last 5 years as on March, 2013

(i.e. existing on or before the date of Commencement of Companies Act, 2013). Here a break in the term for a

continuous period of five years will not be considered as fulfilling the requirement of rotation, Thus, Mr Raj can

continue the audit of M/s. Binaca Ltd. for another 3 years due to transitional effect, i.e. aggregate period in the same

company will be 8 years.

Illustration #5:

M/s Raj Associates, a Chartered Accountants Audit Firm, is doing audit of M/s. Binaca Limited by last 11 years as on March, 2013 (i.e. existing on or before the date of Commencement of Companies Act, 2013), here a break in the term for a continuous period of two terms of five consecutive years will not be considered as fulfilling the requirement of rotation, Thus, M/s Raj Associates can continue the audit of M/s. Binaca Ltd. for another 3 years due to transitional effect, i.e. aggregate period in the same company will be 14 years.

[Also refer Table given after Rule 6 (i.e. Manner of rotation of Auditors by the Companies on Expiry of their Term)]

6. 4th Proviso to Section 139 (2)

The right of the company to remove an auditor or the right of the auditor to resign from such office of the company shall not be affected.

Important Notes

A company may pass a resolution to provide that – (a) The auditing partner and his team in the audit firm shall be rotated at such intervals as may be resolved by the

members, or (b) The audit shall be conducted by more than one auditor. [Section 139(3)]

CG may prescribe the rules stating the manner in which the companies shall rotate their auditors. [Section 139(4)]

AMENDMENT - 2

Duty to Audit Report - Section 143(3) [Mnemonic is: AB3CDE RIO(SLIP)]

The auditor’s report shall also state –

(a) Whether, in his opinion, the Financial Statements (FS) comply with the Accounting Standards;

(b) Whether, in his opinion, proper Books of account as required by law have been kept by the

company so far as appears from his examination of those books and proper returns adequate for

the purposes of his audit have been received from Branches not visited by him;

(c) Whether the report on the accounts of any Branch office of the company audited u/s 143 (8) by a

person other than the company’s auditors has been sent to him under the proviso to section 143(8)

and how the company auditor has dealt with it in preparing his report;



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(d) Whether the company’s Balance Sheet & P/L Account dealt with in the report are in agreement

with the Books of account and returns;

(e) The Comments or observations of the auditors on financial transactions/matters having any

adverse effect on the functioning of the company;

(f) Whether any Director is disqualified from being appointed as a director under Section 164(2);

(g) Whether he has sought (requested) and obtained all the Information and Explanations which to

the best of his knowledge and belief were necessary for the purpose of his audit and if not, the

details and the effect of such information on the financial statements;

(h) Any qualification, reservation or adverse Remark relating to the maintenance of accounts and

other related matters;

(i) Whether the company has adequate Internal Financial Controls system in place and the operating

effectiveness of such controls; [Read alongwith Rule 10A Companies (Audit and Auditors) amendment Rules, 2014]

[Not applicable to Pvt. Co. being – OPC, Start-up, or with Turnover <` 50 Cr. as per latest

Audited FS or Agg. Borrowings from Banks or Fin. Inst. < ` 25 Cr. at any time during the Fin. Yr. ]

(j) Such Other matters as may be prescribed.

Rule 11 of the Companies (Audit and Auditors) Rules, 2014

It prescribes the other matters to be included in auditors report. The auditor’s report shall also

include their views and comments on the following matters –

(i) Whether the company had provided requisite disclosures in its FS as to holdings as well as

dealings in Specified Bank Notes during the period from 8th Nov. 2016 to 30th Dec. 2016 and if

so, whether these are in accordance with the books of accounts maintained by the company. [w.e.f. 30.3.2017]

(ii) Whether the company has disclosed the impact of any pending Litigations (lawsuit) on its

financial position in its FS;

(iii) Whether there has been any delay in transferring amounts, required to be transferred, to the

Investor Education and Protection Fund (IEPF) by the company.

(iv) Whether the company has made Provision for material (significant) foreseeable (likely) losses on

long term contracts including derivative contracts as per law or accounting standards;



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AMENDMENT - 3

Manner of Selection of Independent Directors

and Maintenance of Databank of Independent Directors

1. Independent director to be selected from Databank – Section 150(1)

Subject to Section 149(5), an independent director may be selected from a data bank containing names,

addresses and qualifications of persons who are eligible and willing to act as independent directors,

Maintained by any body, institute or association, as may by notified by CG, having expertise in

creation & maintenance of such data bank and put on their website for the use by the company making

the appointment of such directors.

Provided that

Responsibility of exercising due diligence before selecting a person from the data bank referred to above,

as an independent director shall lie with the company making such appointment.

2. Appointment to be approved at GM – Section 150(2)

The appointment of independent director shall be approved by the company in GM as provided in

Section 152(2), and

The explanatory statement annexed to the notice of GM called to consider the said appointment shall

indicate the justification for choosing the appointee for appointment as independent director.

3. The data bank referred to above, shall create & maintain data of persons willing to act as independent

director in accordance with prescribed rules.

[Rule 6 of The Companies (Appointment and Qualification of Directors) Rules, 2014]

4. CG may prescribe the manner & procedure of selection of independent directors who fulfill the

qualifications and requirements specified u/s 149.

Note: Section 150 shall not apply to a company registered u/s 8 vide Notification G.S.R. 466(E) dt. 5.6.15.

Rule 6 of The Companies (Appointment and Qualification of Directors) Rules, 2014

Creation & Maintenance of databank of persons offering to become independent directors

(1) Data bank to be maintained by agency and placed on website of MCA

Any body, institute or association (hereinafter to be referred as "the agency"), which has been authorised in

this behalf by CG shall create & maintain a data bank of persons willing and eligible to be appointed as

independent director and such data bank shall be placed on the website of MCA or on any other website as

may be approved or notified by CG.

CHAPTER 4 - APPOINTMENT & QUALIFICATION OF DIRECTORS

Section 150



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(2) Details to be maintained in databank

The data bank shall contain the following details in respect of each person included in the data bank to be

eligible and willing to be appointed as independent director -

(a) DIN (Director Identification Number);

(b) The name and surname in full;

(c) Income tax PAN;

(d) The father's name and mother's name and Spouse's name (if married);

(e) The Date of Birth;

(f) Gender;

(g) The Nationality;

(h) The Occupation;

(i) Full Address with PIN Code (present and permanent);

(j) Phone number;

(k) E-mail Id;

(l) The educational and professional qualifications;

(m) Experience or expertise, if any;

(n) Any legal proceedings initiated or pending against such person;

(o) The list of limited liability partnerships in which he is or was a designated partner g

i) The name of the limited liability partnership;

ii) The nature of industry; and

iii) The duration- with dates;

(p) The list of companies in which he is or was director along with –

i) The name of the company;

ii) The nature of industry;

iii) The nature of directorship — Executive or Non-executive or Managing Director or

Independent Director or Nominee Director; and

iv) Duration — with dates.

(3) Disclaimer by agency and Due diligence by Company

A disclaimer shall be conspicuously (clearly) displayed on the website hosting the databank that a

company must exercise its own due diligence before appointment of any person as an independent

director and "the agency" maintaining the databank or CG shall not be held responsible for the accuracy

of information or lack of suitability of the person whose particulars form part of the databank.

(4) Application by person for empanelment

Any person who desires to get his name included in the data bank of independent directors shall make

an application to "the agency".

(5) Fees by agency

The agency may charge a reasonable fee from the applicant for inclusion of his name in the data bank of

independent directors.

(6) Changes in particulars of the person

Any person who has applied for inclusion of his name in the data bank of independent directors or any

person whose name appears in the data bank , shall intimate to the agency about any changes in his

particulars ≤ 15 days of such change.



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(7) Website Features

The databank posted on the website shall –

Be accessible at the specified website;

Be substantially identical to the physical version of the data bank;

Be searchable on the parameters specified in sub-rule (2);

Be presented in a format or formats convenient for both printing and viewing online; and

Contain a link to obtain the software required to view or print the particulars free of charge.

AMENDMENT – 4

Retiring Rotational Directors for Public Company

1. Rotational Directors - Section 152(6)(a) Unless the articles provide for the retirement of all directors at every AGM, not less than 2/3rd of the total number of directors of a public company shall -

Be persons whose period of office is liable to determination by retirement of directors by rotation; & Be appointed by the company in general meeting.

2. Non - Rotational Directors - Section 152(6)(b) The remaining directors in the case of any such company shall, in default of, and subjected to any regulations in the articles of the company, also be appointed by the company in general meeting.

3. How many Rotational Directors to retire? - Section 152(6)(c)

At every AGM of a public company, 1/3rd of such rotational directors, or if their number is neither 3 nor a multiple of 3, then, the number nearest to 1/3rd , shall retire from office.

4. Who shall retire first? - Section 152(6)(d)

The directors to retire by rotation at every AGM shall be –

Those who have been longest in office since their last appointment,

but as between persons who became directors on the same day, those who are to retire shall, in default of and subject to any agreement among themselves, be determined by lot.

5. Re-appointment of Retiring Directors or filling up of Vacancy – Section 152(6)(e)

At the AGM at which a director retires as aforesaid, the company may fill up the vacancy by appointing the retiring director or some other person thereto.

Explanation "Total number of directors" shall not include independent directors, whether appointed under this Act or any other law for the time being in force, on the Board of a company

6. Adjournment of Meeting – Section 152(7)(a)

If the vacancy of the retiring director is not so filled-up and the meeting has not expressly resolved not to fill the vacancy,

the meeting shall stand adjourned till the same day in the next week, at the same time & place,

or if that day is a national holiday, till the next succeeding day which is not a holiday, at the same time and place.

Section 152(6) & (7)



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7. Automatic Re-appointment of Retiring Rotational Directors at Adjourned GM – Section 152(7)(b) If at the adjourned GM also, the vacancy of the retiring director is not filled up and that meeting also has

not expressly resolved not to fill the vacancy, the retiring director shall be deemed to have been re-

appointed at the adjourned GM, unless -

i) At that meeting or at the previous meeting a resolution for the re-appointment of such director has

been put to the meeting and lost;

ii) The retiring director has, by a notice in writing addressed to the company or its Board of directors, expressed his unwillingness to be so re-appointed;

iii) He is not qualified or is disqualified for appointment;

iv) OR or SR is required for his appointment/re-appointment by virtue of any provisions of this Act; or

v) Section 162 is applicable to the case. [Sec.162 - Appointment of Directors to be voted individually]

Explanation – “Retiring Director” means a director retiring by rotation.

Section 152(6) and (7) shall not apply to –

An unlisted Govt. co. in which ≥ 51% of the Paid-up share capital is held by CG/SG/Both;

The exceptions, modifications & adaptations shall be applicable to a Govt. Co. which has not

committed a default in filing its FS u/s 137 or annual return u/s 92 with ROC.

A subsidiary of such Govt. Co. referred to above. [Notification No. G.S.R – 582(E) dt. 13.6.2017]

An unlisted public company licensed to operate by RBI/SEBI/IRDA from IFSC located in approved

multi-services SEZ set up under SEZ Act. [Notification No. G.S.R – 8(E) dt. 4.1.2017]

AMENDMENT - 5

Company to have Board of Directors

1. Minimum and Maximum Directors – Section 149(1)

Every company shall have a Board of Directors consisting of individuals as director shall have —

(a) In case of a public company - Minimum 3 directors, In case of a private company - 2 directors, and

In case of an OPC - 1 director; and

(b) A maximum of 15 directors.

Provided that - A company may appoint more than 15 directors after passing Special Resolution (SR).

Important Notes:

a) Section 149(1) not applicable to Section 8 companies – Notification No. G.S.R. 466(E) dt.5.6.15.

b) Section 149(1)(b) not applicable to Government Companies - Notification No. G.S.R. 463(E) dt.5.6.15.

c) 1st Proviso to Sec. 149(1) not applicable to Section 8 and Govt. Cos. - Notification No. G.S.R. 466(E) and G.S.R

463(E) respectively dt.5.6.15.

Section 149



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2. Woman Director – 2nd Proviso to Section 149(1)

Such class or classes of companies as may be prescribed, shall have at least 1 woman director.

Rule 3 of The Companies (Appointment and Qualification of Directors) Rules, 2014

Following class of companies shall appoint at least one woman director -

(i) Every listed company;

(ii) Every other public company having –

(a) Paid–up share capital of ≥ `100 Crore; or

(b) Turnover ≥ ` 300 Crore.

Provided that

A company, which has been incorporated under the Act and is covered under 2nd proviso to Sec. 149(1)

shall comply with such provisions ≤ 6 months from the date of its incorporation.

Provided further that

Any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not later

than –

Immediate next Board Meeting (BM), or

3 months from the date of such vacancy,

whichever is later.

Explanation

Paid up share capital or turnover, shall be taken as on the last date of latest audited FS.

AMENDMENT - 6

Independent Director – Section 149(4)

Every listed public company shall have ≥ 1/3rd of the total number of directors as independent directors

and CG may prescribe the minimum number of independent directors in case of any class(es) of public

companies.

Explanation

For the purposes of this sub-section, any fraction contained in such 1/3rd number shall be rounded off as 1.

Rule 4 of The Companies (Appointment and Qualification of Directors) Amendment Rules, 2017

(1) The following class or classes of companies shall have at least 2 independent directors –

Public Companies having -

(i) Paid up share capital ≥ `10 crore; or

(ii) Turnover ≥ ` 100 crore; or

(iii) Outstanding loans, debentures and deposits (in aggregate) > `50 crore.



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Provided that

In case such companies are required to appoint a higher number of independent directors due to

composition of its audit committee, such higher no. of independent directors shall be applicable to it.


Any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but not

later than –

Immediate next Board Meeting (BM), or

3 months from the date of such vacancy,

whichever is later.

Provided also that

Where a company ceases to fulfill any of 3 conditions laid down in sub-rule (1) for 3 consecutive

years, it shall not be required to comply with these provisions until such time as it meets any of such

conditions;

Explanation

The paid up share capital or turnover or outstanding loans, debentures and deposits, as the case may be, shall

be taken as on the last date of latest audited FS.

Provided that

A company belonging to any class of companies for which a higher number of independent directors

has been specified in the law for the time being in force shall comply with the requirements so

specified.

(2) The following classes of unlisted public company shall not be covered under sub-rule (1) above,

namely –

(a) A joint venture;

(b) A wholly owned subsidiary; and

(c) A dormant company as defined u/s 455 of the Act.

AMENDMENT - 7

Meetings of Board

1. First Board Meeting and total Board Meetings during a year

Every company shall hold the first meeting of the Board of Directors within 30 days of the date of its

incorporation and thereafter hold a minimum number of 4 meetings of its Board of Directors every year

in such a manner that not more than 120 days shall intervene between 2 consecutive meetings of the

Board.

Section 173

CHAPTER 6 - BOARD MEETINGS & ITS POWERS



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1st Proviso – CG may direct 173 may not apply or apply with some modification, exception or conditions

as specified.

2nd and 3rd Proviso – A specified IFSC Public co./IFSC Pvt. Co. shall hold the 1st BM ≤ 60 days of

incorporation & thereafter hold atleast 1 BM in each half of calendar year.

Exemption Notification - Section 8 (Not for Profit) Companies

The Board of Directors of “Not for Profit" company u/s 8 shall hold at least one meeting within every 6

calendar months instead of at least 4 Board meetings every year.

[Sec.8 Cos. – Board to hold atleast 1 BM within every 6 calendar months]

2. Board Meeting through video conferencing or other audio visual means

The participation of directors in a meeting of the Board may be either in person or through video

conferencing or other audio visual means, as may be prescribed, which are capable of recording and

recognising participation of the directors and of recording & storing the proceedings of such meetings

along with date and time.

Provided that the CG may, by notification, specify such matters which shall not be dealt with in a

meeting through video conferencing or other audio visual means.

3. Length of notice of Board Meeting and presence of independent director

A meeting of the Board shall be called by giving not less than 7 days' notice in writing of Board Meeting

to every director at his address registered with the company and such notice shall be and presence of

sent by hand delivery or by post or by electronic means.

Provided that a meeting of the Board may be called at shorter notice to transact urgent business subject

to the condition that at least 1 independent director, if any shall be present at the meeting.

Provided further that in case of absence of independent directors from such a meeting of the Board,

decisions taken at such a meeting shall be circulated to all the directors and shall be final only on

ratification thereof by at least 1 independent director, if any.

4. Failure to give Notice of Board Meeting

Every officer of the company whose duty is to give, notice under this section and who fails to do so shall

be liable to a penalty of `25,000.

5. Relaxations to One Person Company, Small Company and Dormant Company

One Person Company, Small Company and Dormant Company shall be deemed to have complied with

the provisions of this section if at least 1 meeting of the Board of Directors has been conducted in each

half of a calendar year and the gap between the two meetings is not less than 90 days.

Provided that nothing contained in section 173 & 174 shall apply to One Person Company in which

there is only one director on its Board of Directors.



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AMENDMENT - 8

Quorum for Meetings of Board

1. Quorum

The quorum for a meeting of the Board of Directors of a company shall be higher of -

1/3rd of its total strength or

2 directors

Note :- The participation of the directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum under this sub-section.

2. Number of directors is reduced below the quorum

If the number of directors is reduced below the quorum fixed by the Act, the continuing directors or

director may act for the purpose of:-

increasing the number of directors to that fixed for the quorum, or

for summoning a general meeting of the company and for no other purpose.

3. Quorum when number of interested director are 2/3rd more of total Directors

Where at any time the number of interested directors exceeds or is equal to 2/3rd of the total strength of

the Board of Directors, then Quorum shall be higher of:-

Remaining non-interested directors and present at the meeting,

2 directors.

Explanation. For the purposes of this sub-section, "interested director" means a director within the

meaning of section 184(2).

[Sec. 174(3) shall apply with the exception – interested director can be counted quorum after

disclosure of his interest u/s 184]

4. Adjournment due to want of Quorum

Where a meeting of the Board could not be held for want of quorum, then, unless of Quorum the articles

of the company otherwise provide, the meeting shall automatically stand adjourned to the same day at

the same time and place in the next week or if that day is a national holiday, till the next succeeding day,

which is not a national holiday, at the same time and place.

Explanation. - For the purposes of this section,

Any fraction of a number shall be rounded off as one;

"Total Strength" shall not include directors whose places are vacant.

5. Quorum for Section 8 company Exemption Notification section 8 companies

Quorum for Board Meeting shall be LOWER of:-

(i) 8 members or

(ii) 25% of its total strength.

Provided that the quorum shall not be less than 2 members.

Section 174



AMENDMENT – 9

A company shall comply with the following procedure, for convening and conducting the Board meetings through video conferencing or other audio visual means.

1. Precaution to avoid line failure -

Every Company shall make necessary arrangements to avoid failure of video or audio visual connection.

2. Preparation before the meeting -

The Chairperson of the meeting and the company secretary, if any, shall take due and reasonable care -

(i) To safeguard the integrity of the meeting by ensuring sufficient security and identification

procedures;

(ii) To ensure availability of proper video conferencing or other audio visual equipment or facilities for

providing transmission of the communications for effective participation of the directors and other

authorised participants at the board meeting;

(iii) To record proceedings and prepare the minutes of the meeting;

(iv) To store for safekeeping and marking the tape recording(s) or other electronic recording

mechanism as part of the records of the company at least before the time of completion of audit of

that particular year.

(v) To ensure that no person other than the concerned director are attending or have access to the

proceedings of the meeting through video conferencing mode or other audio visual means; and

(vi) To ensure that participants attending the meeting through audio visual means are able to hear and

see the other participants clearly during the course of the meeting:

Provided that the persons, who are differently abled, may make request to the board to allow a

person to accompany him.

3. Notice of Board Meeting and Intimation by the erector to attend bard Meeting by Video Conferencing

(i) The notice of the meeting shall be sent to all the directors in accordance with the provisions of sub-

section (3) of section 173 of the Act.

(ii) The notice of the meeting shall inform the directors regarding the option available to them to

participate through video conferencing mode or other audio visual means, and shall provide all the

necessary information to enable the directors to participate through video conferencing mode or

other audio visual means.

(iii) A director intending to participate through video conferencing or audio visual means shall

communicate his intention to the Chairperson or the company secretary of the company.

(iv) If the director intends to participate through video conferencing or other audio visual means, he

shall give prior intimation to that effect sufficiently in advance so that company is able to make

suitable arrangements in this behalf.

Board Meeting through Video Conferencing or Audio Visual means



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(v) The director, who desire, to participate may intimate his intention of participation through the

electronic mode at the beginning of the calendar year and such declaration shall be valid for one

calendar year.

(vi) In the absence of any intimation under clause (c), it shall be assumed that the director shall attend the meeting in person.

4. Roll Call At the commencement of the meeting, a roll call shall be taken by the Chairperson when every director participating through video conferencing or other audio visual means shall state, for the record, the following namely:- (i) Name;

(ii) The location from where he is participating;

(iii) That he has received the agenda and all the relevant material for the meeting; and

(iv) That no one other than the concerned director is attending or having access to the proceedings of

the meeting at the location mentioned in clause (b);

5. Other Attendees (a) After the roll call, the Chairperson or the Company Secretary shall inform the Board about the

names of persons other than the directors who are present for the said meeting at the request or with the permission of the Chairperson and confirm that the required quorum is complete.

Explanation.- A director participating in a meeting through video conferencing or other audio visual means shall be counted for the purpose of quorum, unless he of the Act or the is to be excluded for any items of business under any provisions rules.

(b) The Chairperson shall ensure that the required quorum is present throughout the meeting.

6. Meeting Through Video Conferencing shall be deemed to be held at the Scheduled Venue With respect to every meeting conducted through video conferencing or other audio visual means authorised under these rules, the scheduled venue of the meeting as set forth in the notice convening the meeting, shall be deemed to be the place of the said meeting and all recordings off the proceedings at the meeting shall be deemed to be made at such place.

7. Statutory Registers The statutory registers which are required to be placed in the Board meeting as per the provisions of the Act shall be placed at the scheduled venue of the meeting and where such registers are required to be signed by the directors, the same shall be deemed to have been signed by the directors participating through electronic mode, if they have given their consent to this effect and it is so recorded in the minutes of the meeting.

8. Conduct of Directors (i) Every participant shall identify himself for the record before speaking on any item of business on

the agenda. (ii) If a statement of a director in the meeting through video conferencing or other audio visual means

is interrupted or garbled, the Chairperson or Company Secretary shall request for a repeat or reiteration by the Director.

9. Objection of Motion If a motion is objected to and there is a need to put it to vote, the Chairperson shall call the roll and note the vote of each director who shall identify himself while casting his vote.



10. Summary of decision taken At the end of discussion on each agenda item, the Chairperson of the meeting shall announce the summary of the decision taken on such item along with names of the directors, if any, who dissented from the decision taken by majority.

11. Minutes The minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audio visual means.

12. Approval of Board Minutes and Authentication (i) The draft minutes of the meeting shall be circulated among all the directors within 15 days of the

meeting either in writing or in electronic mode as may be decided by the Board.

(ii) Every director who attended the meeting, whether personally or through video conferencing or other audio visual means, shall confirm or give his comments in writing, about the accuracy of recording of the proceedings of that particular meeting in the draft minutes, within 7 days or some reasonable time as decided by the Board, after receipt of the draft minutes failing which his approval shall be presumed.

(iii) After completion of the meeting, the minutes shall be entered in the minute book as specified under section 118 of the Act and signed by the Chairperson. Explanation- a) For the purposes of this rule, "video conferencing or other audio visual means" means audio-

visual electronic communication facility employed which enables all the persons participating in a meeting to communicate effectively in the meeting. concurrently with each other without an intermediary and to participate

b) For the purposes of this rule, "video conferencing or other audio visual means" means audio- visual electronic communication facility employed which enables all the persons participating in a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting.

AMENDMENT – 10

Loan and Investment by Co. (Section applicable to both Public as well as Private Company)

(1) Co. unless otherwise prescribed, make investment through max. 2 layers of Investment Co. Exceptions –

Sec. 186(1) not affect- (a) Co. from acquiring other Co. inc. outside India if Co. has Investment Subsidiaries

beyond 2 layers (b) Subsidiary Co. from having any investment subsidiary for meeting requirements under

law/rule.

(2) Co. not (directly or indirectly) (a) give loan to any person or body corporate (b) give guarantee or provide

security to body corporate or person (c) acquire by way of subscription, purchase or otherwise, securities of

any body corporate, > 60% of its (PSC + FR + SP) or 100% of its (FR + SP) whichever is higher.

(3) Prior approval by SR in GM necessary if existing & proposed Loans/guarantee/ security/acquisition,

exceeds above limits.

(4) Particulars of loans, investment, guarantee or security provided & purpose for which to be utilised by

recipient of loan or guarantee or security to be disclosed to members in FS.

Section 186



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(5) Sanctioning by UBR required for all investments to be made, loans or guarantee or security to be given

Also, prior approval of public financial institution concerned where any term loan is subsisting, is to be

obtained if existing & proposed Loans, Investments, Guarantee, Security in aggregate exceeds limits

specified u/s 186(2) & any default made in repayment.

(6) Co. registered u/s 12 of SEBI Act, 1992 not take inter-corporate loan or deposits exceeding limit prescribed

by SEBI/CG & such Co. furnish in FS details of loan or deposits.

(7) No loan given at Intt. Rate lower than prevailing yield of 1, 3, 5 or 10 yr. Govt. Security closest to tenure of loan.

Provided that Nothing in this sub-section shall apply to a company in which ≥ 26% of PUC is held by

CG/SG/Both, in respect of loans provided by such company for funding Industrial Research & Development

projects in furtherance objects as stated in its MoA. Section 186(7) also not apply to Sec.8 Companies

[Provided that such company has not defaulted in filing FS u/ 137 or annual return u/s 92 with ROC].

(8) Co. made default in repayment of deposits accepted before/after commencement of this Act or in payment

of interest there on, not give any loan, guarantee or security or make an acquisition till such default is

subsisting.

(9)Register maintained by Co. (10) (1) Register shall be kept at Registered Office (2) Open for Inspection (3)

Extracts may be taken by any member & copies may be furnished to any member on payment of fees.

(11) Section [except sub-section (1)], not applicable to –

(a) Loan/guarantee/security provided by Banking Co, Insurance Co, Housing Finance Co in ordinary

course of business or Co. engaged in business of financing of Co. or providing infrastructural facilities;

(b)Acquisition – (i) made by NBFC registered under RBI Act, 1934 & principal business is acquisition of

securities Exemption to NBFC shall be for investment & lending activities (ii) made by Co. whose

principal business is acquisition of securities (iii) of shares allotted as per Section 62(1)(a). (iv) Made by

the banking company or an insurance company or a housing finance company, making acquisition of securities in

the ordinary course of its business.

(12) CG may make rules for purpose of this section.

(13) Penalty:

Company - Fine ≥ `25,000/- but ≤ `5,00,000/-.

Officer in default – Impr.≤ 2 yrs. & Fine ≥ `25,000/- but ≤`1,00,000/-

Section 186 not applicable to - (a) Govt. Co. engaged in Defence Production (b) Govt. Co., other than a listed co. in

case such co. obtains approval of Ministry or Dept. of CG which is administratively in-charge of the co. or SG.

(c) Unlisted Public Cos. or Pvt. Cos. licensed to operate by RBI/SEBI/IRDA from IFSC located in approved SEZ set up

under SEZ Act shall not be applicable.

*Companies (Meetings of Board and its Powers) Rules, 2014- Explanation: "Investment Company" means

company whose principal business is acquisition of shares, debentures or other securities "Infrastructure

Facilities" means facilities specified in Schedule VI.



AMENDMENT – 11

Investigation into Affairs of Company by SFIO

1. CG to assign investigation to SFIO

Without prejudice to section 210, where CG is of the opinion, that it is necessary to investigate into the

affairs of a company by SFIO –

a) On receipt of a report of the Registrar or inspector u/s 208;

b) On intimation of SR passed by a company that its affairs are required to be investigated;

c) In the public interest; or

d) On request from any Department of CG/SG,

then –

CG may, by order, assign investigation into the affairs of the said company to SFIO and

Its director, may designate such number of inspectors, as he may consider necessary for the purpose of

such investigation.

2. No other agency to investigate/further investigate

Where any case has been assigned by CG to SFIO for investigation under this Act,

no other investigating agency of CG/any SG shall proceed with investigation in such case in respect of

any offence under this Act and

in case any such investigation has already been initiated, it shall not be proceeded further with and

the concerned agency shall transfer the relevant documents & records in respect of such offences under

this Act to SFIO.

3. Conduct of Investigation

Where the investigation into the affairs of the company has been assigned by CG to SFIO, it shall conduct

the investigation in the manner and follow the procedure provided in this Chapter; and submit its report to

CG within such period as may be specified in the Order.

4. Powers of the Inspector

The Director, SFIO shall cause the affairs of the company to be investigated by an Investigating Officer

who shall have the power of the inspector u/s 217.

5. Duties of Company, Officer and Employees

The company and its officers and employees, who are or have been in employment of the company shall be

responsible to provide all information, explanation & documents and assistance to the Investigation Officer

as he may require for conduct of the investigation.

Section 212

CHAPTER 7 - INSPECTION, INQUIRY & INVESTIGATION



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6. Cognizable Offences

Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the offence covered u/s 447

of this Act shall be cognizable and no person accused of any offence under those sections shall be released

on bail or on his own bond unless - [Cognizable Offence – Offence for which police officer can make arrest without warrant]

(i) The Public Prosecutor has been given an opportunity to oppose the application for such release; and

(ii) Where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable

grounds for believing that he is not guilty of such offence and that he is not likely to commit any

offence while on bail.

Provided that

A person, who, is < 16 years or is a woman or is sick or infirm, may be released on bail, if the Special Court

so directs.


The Special Court shall not take cognizance of any offence referred to this sub-section except upon a

complaint in writing made by –

(i) The Director, SFIO; or

(ii) Any officer of CG authorised, by a general/special order in writing in this behalf by that Government.

7. The limitation on granting of bail specified in sub-section (6) is in addition to the limitation under the

Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail.

8. Arrest for cognizable offence [w.e.f. 24th August, 2017]

If the Director, Additional Director or Assistant Director of SFIO authorised in this behalf by CG, by

general or special order,

has on the basis of material in his possession reason to believe (to be recorded in writing) that any

person has been guilty of any offence punishable under sections referred to in sub-section (6),

he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

9. Copy of Order to SFIO

The Director, Additional Director or Assistant Director of SFIO shall, immediately after arrest of

such person under sub-section (8),

forward a copy of the order, along with the material in his possession, referred to in that sub-section,

to SFIO in a sealed envelope, in the manner prescribed and

SFIO shall keep such order and material for such period as may be prescribed.

10. Every person arrested under sub-section (8) shall ≤ 24 hours, be taken to a Judicial Magistrate or a

Metropolitan Magistrate, as the case may be, having jurisdiction.



Provided that The period of 24 hours shall exclude the time of journey from the place of arrest to the Magistrate's court.

11. CG if so directs, the SFIO shall submit an interim report to the CG.

12. On completion of the investigation, the SFIO shall submit the investigation report to CG.

13. Notwithstanding anything contained in this Act/in any other law for the time being in force, a copy of the

investigation report may be obtained by any person concerned by making an application in this regard to

the court.

14. CG’s Direction to initiate prosecution

On receipt of the investigation report, CG may, after examination of the report (and after taking such legal

advice, as it may think fit), direct the SFIO to initiate prosecution against the company and its officers or

employees, who are or have been in employment of the company or any other person directly or indirectly

connected with the affairs of the company.

15. Investigation Report deemed to be Report filed by police officer

Notwithstanding anything contained in this Act or in any other law for the time being in force, the

investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed

by a police officer u/s 173 of the Code of Criminal Procedure, 1973.

16. Notwithstanding anything contained in this Act, any investigation or other action taken or initiated by

SFIO under the provisions of the Companies Act, 1956 shall continue to be proceeded with under that Act

as if this Act had not been passed.

17. Other agencies, authorities to provide information to SFIO

(a) In case SFIO has been investigating any offence under this Act, any other investigating agency, SG,

police authority, income-tax authorities having any information or documents in respect of such

offence shall provide all such information or documents available with it to the SFIO;

(b) The SFIO shall share any information or documents available with it, with any investigating agency,

SG, police authority or income tax authorities, which may be relevant or useful for such investigating

agency, SG, police authority or income-tax authorities in respect of any offence or matter being

investigated or examined by it under any other law.

AMENDMENT – 12

Sec. 230 Power to Comp. or make Arrang. with creditors & members

(1) Where comp./arrang. proposed – (a) b/w co. & creditors or class of them; or (b) b/w co. & members or

class of them. Tribunal on appl. of co./creditor/member or in case co. wound up, of liquidator,

appointed under this Act or under IBC, 2016, as the case may be, order meeting of creditor/ members to be

called, held & conducted in manner Tribunal directs. [Rule 3]

CHAPTER 8 – COMPROMISE, ARRANGEMENTS & AMALGAMATION



(2) Co. or other person, app. made u/s 230(1), disclose to Tribunal by affidavit –

(a) all material facts relating co., such as financial position, auditor’s report & pending investigation;

(b) reduction of share capital; (c) Schemes of corporate debt re-struct. consented to by ≥ 75% of secured

creditors in value, including – (i) Creditor’s responsibility statement in prescribed form; [Rule 4], (ii)

Safeguards for creditors; (iii) report by auditor that fund requirements after corporate debt re-

struct. as approved conform to liquidity test; (iv) where co. proposes to adopt corporate debt re-

struct. guidelines specified by RBI, statement to that effect; & (v) Valuation report w.r.t. shares &

property & all assets, by registered valuer. [Rule 5]

(3) Where meeting proposed called by order of Tribunal u/s 230(1), notice sent to all creditors & members &

debenture-holders, individually at address registered with co. accompanied by statement disclosing

details of comp./arrang., valuation report, & explaining effect on creditors, KMP, promoters & non-

promoter, & debenture holders & on material interests of directors/debenture trustees, and other

matters as prescribed [Rule 6].

Provided that notice & other documents placed on website of co., & listed co., these documents sent to

SEBI & stock exchange where securities listed, for placing on their website & published in newspapers in

manner prescribed. [Rule 7 & 12]. Provided further where notice issued by advt., indicate time within

which copies of comp./arrang. made to concerned persons free of charge from RO of co. [Rule 11].

(4) Notice u/s 230(3) provide that persons to whom notice sent vote in meeting either themselves or proxies

or postal ballot to adoption of comp./arrang. ≤ 1 month from date of receipt of notice. Provided that

objection to comp./arrang. made only by persons holding ≥ 10% of shareholding or outstanding debt ≥ 5%

as per audited FS. [Rule 9, 10, 13, 14]

(5) Notice u/s 230(3) along with documents in form as prescribed sent to CG, IT authorities, RBI, SEBI,

ROC, respective stock exchanges, Official Liquidator, Competition Commission of India as per sec 7(1) of

Competition Act, 2002, if necessary, & other sectorial regulators or authorities which likely to affected by

comp./arrang. & require that representations, made by them ≤ 30 days from date of receipt of notice,

failing which, presumed that no representations to make on proposals. [Rule 8]

(6) Where meeting held u/s 230(1), majority of persons representing 3/4 in value of creditors, or members,

voting in person/proxy/postal ballot, agree to comp./arrang. & if sanctioned by Tribunal, binding on

co., all creditors, or members, or in case of co. wound up, on liquidator (appointed under this act or

Insolvency and Bankruptcy Code,2016 i.e. Inserted by Insolvency and Bankruptcy Code, 2016 w.e.f. 15-11-2016)

& contributories of co. ( Rule 15, 16).

(7) Order made by Tribunal u/s 230(6) provide for all or any of following matters, namely: -(a) where

comp./arrang. provides for conversion of preference shares into equity shares, preference shareholders

given option to obtain arrears of dividend in cash or accept equity shares equal to value of dividend

payable; (b) protection of class of creditors; (c) if comp./arrang. results in variation of shareholders’

rights, given effect to sec. 4; (d) if comp./ arrang. agreed by creditors u/s 230(6), any proceedings

pending before Board for Industrial & Financial Re-const. established u/s 4 of Sick Industrial Companies

(Special Provisions) Act, 1985 abate; (e) other matter including exit offer to dissenting shareholders, as

opinion of Tribunal necessary to effectively implement terms of comp./arrang., Provided that: No

comp./arrang. sanctioned by Tribunal unless certificate by co.’s auditor filed with Tribunal to the effect that

accounting treatment, proposed in scheme of comp./arrang. in conformity with AS u/s 133.



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(8) Order of Tribunal filed with ROC. ≤ 30 days of receipt of order. [Rule 17]

(9) Tribunal dispense with calling of meeting of creditor where creditors, having ≥ 90% of value, agree &

confirm, by way of affidavit, to scheme of comp. or arrang.

(10) No comp./arrang. w.r.t buy-back of securities under this sec. sanctioned by Tribunal unless such buy-back

is as u/s 68.

Sub-sections (11) & (12) not yet notified

Note: For Government Companies

The word "Tribunal" shall be substituted by "Central Government" wherever it occurs in Sections 230 to Section 232,

provided that such Govt. Co. has not committed a default in filing its FS u/s 137 or Annual return u/s 92 of the said Act

with ROC. [Notification No. GSR 582(E) dated 13-6-2017]

AMENDMENT – 13

Chapter XVII of the Companies Act, 2013 - Registered Valuers

[Enforced w.e.f. 18th October, 2017 vide MCA Notification F.No.7/27/2013-CLV]

MCA notified Section 247 on `Valuation by Registered Valuers’ alongwith the Companies (Registered Valuers

and Valuation) Rules, 2017

These rules are basically about who could become valuer and the process of registration & deregistration of

these valuers with the Insolvency and Bankruptcy Board of India (IBBI).

CG has delegated its powers & functions vested in section 247 of the Companies Act, 2013 related to valuation

any property, stocks, shares, debentures, securities or goodwill or any other assets by registered valuers to

IBBI vide its Notification Dated 23.10.2017.

Section 247 – Valuation by Registered Valuer

(1) Valuation by a person having prescribed qualifications, experience and registered as a Valuer

Where a valuation is required to be made in respect of - any property, stocks, shares, debentures, securities

or goodwill or any other assets (herein referred to as the assets); or net worth; or liabilities

of a company, it shall be valued by a person having such qualifications & experience, registered as a

valuer and being a member of an organisation recognised, in such manner, on such terms & conditions as

may be prescribed and appointed by the audit committee/BoD of that company.

(2) Duties of valuer

The valuer appointed under sub-section (1) shall,—

a) make an impartial, true and fair valuation of any assets which may be required to be valued;

b) exercise due diligence while performing the functions as valuer;

c) make the valuation in accordance with such rules as may be prescribed; and

d) not undertake valuation of any assets in which he has a direct/indirect interest/becomes so interested at

any time during or after the valuation of assets.

CHAPTER 9 – PREVENTION OF OPPRESSION & MISMANAGEMENT



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(3) Consequences for Contravention If valuer contravenes provisions of this section/rules made thereunder, he shall be punishable with fine ≥ `25,000 but ≤ `1 lakh.

Provided that: If valuer has contravened such provisions with intention to defraud co. or its members, he shall be punishable with - (a) Impr. ≤ 1 year and (b) Fine ≥ `1 lakh but ≤ `5 lakh.

(4) Refund of remuneration & Payment for damages Where valuer convicted under sub-section (3), he shall be liable to— refund remuneration received by him

to the company; and pay for damages to co./ any other person for loss arising out of incorrect or

misleading statements of particulars made in his report.

Companies (Registered Valuers and Valuation) Rules, 2017

There are total of 21 rules divided into 6 chapters and also consists of 4 Annexures, the important one being discussed below

Rule 3(1) - Eligibility for registered valuers as an individual

A person shall be eligible to be registered valuer if he – (a) is a valuer member of a regd. valuers organisation;

(b) is recommended by the registered valuers organisation of which he is a valuer member for registration as a

valuer; (c) has passed valuation examination (under Rule 5) ≤ 3 yrs preceding date of making an application

for registration (under rule 6); (d) possesses qualifications & experience specified in rule 4; (e) is not a minor;

(f) not been declared to be of unsound mind; (g) is not an undischarged bankrupt, or has not applied to be

adjudicated as a bankrupt; (h) is a person resident in India;

[Explanation─ ‘Person resident in India’ shall have same meaning as defined in section 2(v) of FEMA, 1999 as applicable to an individual;] (i) has not been convicted by any competent court for an offence - punishable with imprisonment for > 6 months; or involving moral turpitude, and 5 years has not elapsed from date of expiry of sentence. Provided that: If person has been convicted of any offence & sentenced thereof to imprisonment for ≥ 7 yrs., he shall not be eligible to be registered; (j) has not been levied a penalty u/s 271J of Income-Tax Act, 1961 and time limit for filing appeal before CIT (Appeals) or ITAT, has expired, or such penalty has been confirmed by ITAT, and 5 yrs. have not elapsed after levy of such penalty; and

(k) is a fit and proper person.

Explanation ─ For determining whether an individual is a fit and proper person under these rules, the

authority shall take into account the following criteria: (i) Integrity, reputation and character; (ii) Absence of

convictions and restraint orders, and (iii) Competence and financial solvency.

Rule 3(2) - Eligibility of partnership entity/ company to be registered valuers

No partnership entity or company shall be eligible to be a registered valuer if –

(a) it has been set up for objects other than for rendering professional/financial services, including valuation

services & that in case of a company, it is not a subsidiary, joint venture/associate of another co./body

corporate;



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(b) it is undergoing an insolvency resolution or is an undischarged bankrupt;

(c) all the partners/directors, are not ineligible under clauses (c), (d), (e), (g) to (k) of sub-rule (1);

(d) three or all the partners/directors, whichever is lower, of the partnership entity/company are not

registered valuers; or

(e) none of its partners/directors is a registered valuer for the asset class, for the valuation of which it seeks to

be a registered valuer.

Rule 4 - Qualifications and experience

An individual shall have the following qualifications & experience to be eligible for regn. under rule 3 -

(a) post-graduate degree/post-graduate diploma, in specified discipline, from University/Institute established,

recognised/incorporated by law in India and at least 3 years of experience in specified discipline thereafter;

or

(b) a Bachelor’s degree or equivalent, in the specified discipline, from a University/Institute established,

recognised/incorporated by law in India and at least 5 years of experience in specified discipline thereafter;

or

(c) membership of a professional institute established by an Act of Parliament enacted for purpose of

regulation of a profession with at least 3 years’ experience after such membership and having qualification

in clause (a) or (b).

Explanations –

‘Specified Discipline’ shall mean the specific discipline which is relevant for valuation of an asset class for

which registration as a valuer/recognition as a regd. valuers organisation is sought under these rules.

`Qualifying education & experience and examination/training’ for various asset classes, is given in an

indicative manner in Annexure–IV of these rules.

Rule 5 - Valuation Examination

(1) Authority to conduct examination, recognise an educational course of registered valuers organisation and

recognise master’s/ post graduate examination of University: The authority [“authority” means an

authority specified by CG u/s 458 of the Cos. Act, 2013 to perform the functions under these rules]

shall, either on its own or through a designated agency, conduct valuation examination for one or more

asset classes, for individuals, who possess the qualifications & experience (in rule 4), and have completed

their educational courses as member of a registered valuers organisation, to test their professional

knowledge, skills, values and ethics in respect of valuation.

Provided that:

Authority may recognise an educational course conducted by regd. valuers organisation before its

recognition as adequate for purpose of appearing for valuation examination.

Provided also that:

Authority may recognise examination conducted as part of Master’s/PG Degree course conducted by a

University which is equivalent to valuation examination.

(2) Authority shall determine the syllabus for various valuation specific subjects or assets classes:

Authority to determine syllabus for various valuation specific subjects/assets classes for valuation

examination on recommendation of one or more Committee of experts constituted by authority in this

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(3) Syllabus, format and frequency of the valuation examination, including qualifying marks, shall be

published on website of authority:

The syllabus, format and frequency of the valuation examination, including qualifying marks, shall be

published on the website of the authority at least three months before the examination.

(4) Acknowledgement of passing the examination:

An individual who passes valuation examination, shall receive acknowledgement of passing exams.

(5) Number of times an individual may appear for examination (No. of Attempts):

An individual may appear for the valuation examination any number of times.

Rule 6 - Application for certificate of registration

(1) Filing of application by an Individual in prescribed form & fees

Individual eligible for registration as regd. valuer under rule 3 may make an application to authority in

Form-A alongwith non-refundable application fee of ` 5,000.

(2) Filing of application by a partnership entity/ co. in prescribed form with payment of prescribed fees: A

partnership entity or company eligible for registration as regd. valuer under rule 3 may make an

application to authority in Form-B along with a non-refundable application fee of ` 10,000.

(3) Deficiencies to be rectified/removed ≤ 21 days

Authority shall examine the application, and may grant 21 days to applicant to remove deficiencies, if any,

in the application.

(4) Additional documents

Authority may require applicant to submit additional documents/clarification ≤ 21 days.

(5) Appearance before authority

Authority may require applicant to appear, ≤ 21 days, before authority in person or through its auth. rep.

for expl./clarifications required for processing the application.

(6) Certificate of registration

If authority is satisfied, after such scrutiny, inspection/inquiry as it deems necessary, that applicant is

eligible under these rules, it may grant a certificate of registration to applicant to carry on activities of a

regd. valuer for relevant asset class(es) in Form-C, ≤ 60 days of receipt of application, excluding time given

by authority for presenting addl. Docs., info./ clarification, or appearing in person.

(7) Refusal for granting certificate of registration

If, after considering an application, authority is of prima facie opinion that regn. shall not be granted, it

shall communicate reasons for forming such an opinion ≤ 45 days of receipt of application, excluding time

given by it for removing deficiencies, presenting addl. Docs./clarifications, or appearing in person.

(8) Submission of explanations by the applicant

The applicant shall ≤ 15 days of receipt of communication under sub- rule (7), submit an explanation as to

why his/its application should be accepted, to enable the authority to form a final opinion.



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(9) Order accepting or rejecting the application

After considering explanation, if any, given by applicant under sub-rule (8), authority shall either -

(a) Accept the application and grant the certificate of registration; or

(b) Reject application by an order, giving reasons thereof.

(10) Communication of decision to the applicant

Authority shall communicate its decision to applicant ≤ 30 days of receipt of explanation.

Rule 7 - Conditions of Registration

Registration granted under Rule 6 shall be subject to the conditions that valuer shall -

(a) at all times possess eligibility & qualification, experience criteria as specified under rule 3 & 4;

(b) at all times comply with provisions of Act, these rules & Bye-laws/internal regulations, of respective

registered valuers organisation;

(c) in capacity of regd. valuer, not conduct valuation of assets or class(es) of assets other than for which he/it

has been registered by authority;

(d) take prior permission of authority for shifting his/its membership from one regd. valuers organisation to

another;

(e) Take adequate steps for redressal of grievances;

(f) maintain records of each assignment undertaken by him for at least 3 years from completion of such

assignment;

(g) comply with Code of Conduct (Annexure-I) of registered valuers organisation of which he is a member;

(h) in case partnership entity/co. is registered valuer, allow only partner/director who is regd. valuer for asset

class(es) that is being valued to sign & act on behalf of it;

(i) in case partnership entity/co. is regd. valuer, it shall disclose to co. concerned, the extent of capital

employed/contributed in partnership entity or co. by partner/director who would sign & act in respect of

relevant valuation assignment for co.;

(j) in case partnership entity is regd. valuer, be liable jointly & severally along with partner who signs & acts in

respect of a valuation assignment on behalf of the partnership entity;

(k) in case company is regd. valuer, co. liable alongwith director who signs & acts in respect of valuation

assignment on behalf of co.;

(l) in case partnership entity or co. is regd. valuer, immediately inform authority about removal of a

partner/director, along with detailed reasons for such removal;

(m) comply with such other conditions as may be imposed by auth.

Rule 8 - Conduct of valuation

(1) Registered valuer shall, while conducting valuation, comply with valuation standards notified/modified under rule 18:

Provided that: until valuation standards are notified/modified by CG, a valuer shall make valuations as

per – (a) internationally accepted valuation standards; (b) valuation standards adopted by any registered

valuers organisation.



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(2) Obtaining opinion/separate valuation from another Regd. valuer

Registered valuer may obtain inputs for his valuation report/get a separate valuation for an asset class

conducted from another registered valuer, in which fully disclose details of inputs & particulars etc. of

other regd. valuer in his report & liabilities against resultant valuation, irrespective of nature of

inputs/valuation by other registered valuer, shall remain of first mentioned regd. valuer.

(3) Contents of valuation report:

Valuer shall, in his report, state the following: (a) background info. of asset being valued;

(b) purpose of valuation & appointing auth.; (c) identity of valuer & any other experts involved in

valuation; (d) disclosure of valuer interest/conflict, if any; (e) Date of appointment, valuation date & date

of report; (f) Inspections and/or investigations undertaken; (g) nature & sources of information

used/relied upon; (h) Procedures adopted in carrying out valuation & valuation standards followed; (i)

restrictions on use of report, if any; (j) major factors taken into account during valuation;

(k) conclusion; and (l) caveats, limitations & disclaimers to extent they explain/elucidate limitations faced

by valuer, which shall not be for purpose of limiting his responsibility for the valuation report.

Rule 9(1), (2) & (3) – Temprory surrender

A valuation professional organisation shall inform the Registration Authority if any valuer who is its member has temporarily surrendered/revived his/its membership after temporary surrender, not later than 7 days from approval of application for temporary surrender/revival.

Rule 10 – Functions of a valuer

Valuer shall conduct valuation required under the Act as per these rules and conduct valuation under any

other law or by any other regulatory authority as per these rules.

Rule 11 - Transitional Arrangement Any person rendering valuation services under the Act, on date of commencement of these rules, may continue to render valuation services without certificate of registration under these rules upto 31st March, 2018:

Provided that If a co. has appointed any valuer before such date & valuation/any part of it has not been completed before 31st March, 2018, the valuer shall complete such valuation or such part within three months thereafter.

Explanation It is hereby clarified that conduct of valuation by any person under any law other than the Act, or these rules

shall not be effected by virtue of coming into effect of these rules unless the relevant other laws or other

regulatory bodies require valuation by such person in accordance with these rules in which case these rules

shall apply for such valuation also from the date specified under the laws or by the regulatory bodies.

Rule 18 - Valuation Standards

CG shall notify & may modify (from time to time) the valuation standards on recommendations of the

Committee set up under rule 19.

Rule 19 - Committee to advise on valuation matters

(1) CG may constitute a Committee to be known as “Committee to advise on valuation matters” to make

recommendations on formulation & laying down of valuation standards & policies for compliance by

companies and registered valuers.



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(2) The Committee shall comprise of:

(a) a Chairperson who shall be a person of eminence and well versed in valuation, accountancy, finance,

business administration, business law, corporate law, economics;

(b) 1 member nominated by the Ministry of Corporate Affairs (MCA);

(c) 1 member nominated by the Insolvency and Bankruptcy Board of India (IBBI);

(d) 1 member nominated by the Legislative Department;

(e) upto 4 members nominated by CG representing authorities which are allowing valuations by

registered valuers;

(f) upto 4 members who are representatives of registered valuers organisations, nominated by CG;

(g) upto 2 members to represent industry & other stakeholder nominated by CG in consultation with the

authority.

Tenure of Committee: Rule 19(3) provides that the Chairperson and Members of the Committee shall have a

tenure of three years and they shall not have more than two tenures.

AMENDMENT – 14

"Transfer of certain pending proceedings"

1. On such date as may be notified by the CG in this behalf, -

(a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in

this section referred to as the Company Law Board) constituted under sub-section (1) of section 10E of

the Companies Act, 1956, immediately before such date shall stand transferred to the Tribunal and the

Tribunal shall dispose of such matters, proceedings or cases in accordance with the provisions of this

Act;

(b) any person aggrieved by any decision or order of the Company Law Board made before such date

may file an appeal to the High Court within sixty days from the date of communication of the decision

or order of the Company Law Board to him on any question of law arising out of such order:

Provided that the High Court may if it is satisfied that the appellant was prevented by sufficient cause

from filing an appeal within the said period, allow it to be filed within a further period not exceeding

sixty days;

(c) all proceedings under the Companies Act, 1956, including proceedings relating to arbitration,

compromise, arrangements and reconstruction and winding up of companies, pending immediately

before such date before any District Court or High Court, shall stand transferred to the Tribunal and

the Tribunal may proceed to deal with such proceedings from the stage before their transfer.

(d) any appeal preferred to the Appellate Authority for Industrial and Financial Reconstruction or any

reference made or pending to or before the Board of Industrial and Financial Reconstruction or any

proceeding of whatever nature pending before the Appellate Authority for Industrial and Financial

Reconstruction or the Board for Industrial and Financial Reconstruction under the Sick Industrial

Companies (Special Provisions) Act, 1985 immediately before the commencement of this Act shall

stand abated:

Section 434

CHAPTER 15 - NCLT & NCLAT



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Provided that:

only such proceedings relating to the winding up of companies shall be transferred to Tribunal that

are at a stage as may be prescribed by CG.

Provided also that:

only such proceedings relating to cases other than winding-up, for which orders for allowing or

otherwise of the proceedings are not reserved by HCs shall be transferred to Tribunal.

Provided further that –

(i) all proceedings under Cos. Act, 1956 other than the cases relating to winding up of companies that

are reserved for orders for allowing or otherwise such proceedings; or

(ii) the proceedings relating to winding up of companies which have not been transferred from HCs;

shall be dealt with as per provisions of the Cos. Act, 1956 and the Companies (Court) Rules, 1959.

Provided also that

Proceedings relating to cases of voluntary winding up of a company where notice of the resolution by

advertisement has been given u/s 485(1) of the Cos. Act, 1956 but company has not been dissolved

before 1st April, 2017 shall continue to be dealt with as per provisions of Cos. Act. 1956 and the

Companies (Court) Rules, 1959.

2. The CG may make rules consistent with the provisions of this Act to ensure timely transfer of all matters,

proceedings or cases pending before the Company Law Board or the courts, to Tribunal under this section.

AMENDMENT – 15

Section 2 – Applicability [enforced w.e.f 15.5.2017]

The provisions of this Code shall apply to—

(a) any company incorporated under the Companies Act, 2013 or under any previous company law;

(b) any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act;

(c) any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008;

(d) such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf; and

(e) partnership firms and individuals, [not yet enforced ]

in relation to their insolvency, liquidation, voluntary liquidation or bankruptcy, as the case may be

CHAPTER 28 - OVERVIEW OF INSOLVENCY AND BANKRUPTCY CODE 2016



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AMENDMENT – 16

Sec. 30 - Submission of Resolution Plan

Resolution applicant submits resolution plan to resolution professional prepared on basis of information memorandum.

Resolution professional examines each plan received to confirm that each resolution plan—

(a) provides for payment of insolvency resolution process costs in manner specified by Board in priority to repayment of other debts of corporate debtor;

(b) provides for repayment of debts of operational creditors in manner as specified by Board not less than amount paid to operational creditors in event of liquidation of corporate debtor u/s 53;

(c) provides for management of affairs of Corporate debtor after approval of resolution plan;

(d) implementation & supervision of resolution plan;

(e) Not contravene any provisions of law in force;

Clarification: it is here by clarified that the approval of shareholders/members of the corporate debtor/

company for a particular action required in the resolution plan for its implementation which would have

been required under the companies Act, 2013 or any other law if the resolution plan of the company was not

being considered under the Code, is deemed to have been given on its approval by the Adjudicating

Authority.

(f) Conforms to other requirements as specified by Board.

AMENDMENT – 17

Holding Company and Subsidiary Company

1. Holding Company – Section 2(46)

In relation to one or more other companies, it means a company of which such companies are subsidiary

companies.

2. Subsidiary Company or Subsidiary – Section 2(87) In relation to any other company (i.e. holding company), it means a company in which the holding company – i) Controls the composition of the Board of directors; or ii) Exercises or controls more than one-half the total share capital either by itself or together with one or

more of its subsidiary companies:

Section 2(46) and 2(87)



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Provided that Such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

[S.O. 3086(E) — In exercise of the powers conferred by Section 1(3) of the Cos. Act, 2013, CG hereby appoints 20.9.2017 as the date on which proviso to Section 2(87) of the said Act shall come into force.]

Restriction on number of layers for certain classes of holding companies - As per Rule 2 of the Companies (Restriction on Number of Layers) Rules, 2017— [Notified w.e.f 22. 9. 2017]

(1) On and from the date of commencement of these rules, no company, other than a company belonging to a class specified in sub-rule shall have more than two layers of subsidiaries: Provided that The provisions of this sub-rule shall not affect a company from acquiring a company incorporated outside India with subsidiaries beyond two layers as per the laws of such country:

Provided further that For computing the number of layers under this rule, one layer which consists of one or more wholly

owned subsidiary or subsidiaries shall not be taken into account.

(2) The provisions of this rule shall not apply to the following classes of companies, namely—

a) A banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949;

b) A non-banking financial company as defined in Sec. 45-I (f) of the Reserve Bank of India Act, 1934 which is registered with RBI and considered as systematically important NBFC by RBI;

c) An insurance company being a company which carries on the business of insurance in accordance with provisions of the Insurance Act, 1938 and the IRDA, 1999;

d) A Govt. company referred to in Section 2(45) of the Act.

(3) The provisions of this rule shall not be in derogation of the proviso to section 186(1) of the Act.

(4) Every company, other than a company referred to in sub-rule (2), existing on or before the commencement of these rules, which has number of layers of subsidiaries in excess of the layers specified in sub-rule (1) – i) Shall file, with the ROC a return in Form CRL-1 disclosing the details specified therein, ≤ 150 days

from the date of publication of these rules in the Official Gazette;

ii) Shall not, after the date of commencement of these rules, have any additional layer of subsidiaries over and above the layers existing on such date; and

iii) Shall not, in case one or more layers are reduced by it subsequent to the commencement of these rules, have the number of layers beyond the number of layers it has after such reduction or maximum layers allowed in sub rule (1), whichever is more.

(5) If any company contravenes any provision of these rules the company and every officer of the company who is in default shall be punishable with – Fine ≤ ` 10,000 and Fine ≤ ` 10,000 in case of continuing default.



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AMENDMENT - 18

Definitions - Sec. 2

(1) In this Act, unless the context otherwise requires, -

(a) Board - means the Securities & Exchange Board of India established u/s 3;

(b) Chairman - means the Chairman of Board;

(ba) Collective Investment Scheme - means any scheme or arrangement which satisfies conditions specified in

Sec.11AA;]

(c) Existing Securities & Exchange Board - means the Securities & Exchange Board of India constituted under

the Resolution of Govt. of India in Department of Economic Affairs No. 1(44) SE/86, dt. 12th April, 1988;

(d) Fund - means the Fund constituted u/s 14;

(da) Insurance Regulatory & Development Authority - means Insurance Regulatory & Development Authority

of India established u/s 3(1) of IRDA Act, 1999;

(db) Judicial Member - means a Member of Securities Appellate Tribunal appointed u/s 15MA(1) & includes

Presiding Officer;

(e) Member - means a member of Board & includes the Chairman;

(f) Notification - means a notification published in the Official Gazette;

(fa) Pension Fund Regulatory & Development Authority (PFRDA) - means Pension Fund Regulatory &

Development Authority established u/s 3(1) of Pension Fund Regulatory & Development Authority Act,

2013;

(g) Prescribed - means prescribed by rules made under this Act;

(h) Regulations - means the regulations made by Board under this Act;

(ha) Reserve Bank - means RBI constituted u/s 3 of RBI Act, 1934;

(i) Securities - has the meaning assigned to it in Sec. 2 of SCRA, 1956.

(j) Technical Member - means a Technical Member appointed u/s 15MB(1).

AMENDMENT- 19

Factors to be taken into account by AO - Sec.15 J

For adjudicating penalty u/s 15-I, following factors be considered – a) Amt. of disproportionate gain/unfair

advantage made as a result of default; b) Amount of loss caused to an investor/group as a result of default; c)

Repetitive nature of default.

Explanation - For removal of doubts, it is clarified that power of an AO to adjudge quantum of penalty u/s

15A to 15E, clauses (b) & (c) of Sec. 15F, 15G, 15H & 15HA shall be & shall always be deemed to have been

exercised under the provisions of this section.

THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992



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Establishment of Securities Appellate Tribunal - Section 15K

(1) CG shall, by notification, establish a Tribunal to be known as the Securities Appellate Tribunal (SAT) to

exercise the jurisdiction, powers and authority conferred on it by or under this Act or any other law for the

time being in force.

(2) CG shall also specify in the notification referred to in sub- section (1), the matters and places in relation to which the SAT may exercise jurisdiction.

Composition of Securities Appellate Tribunal - Sec.15L

1) SAT shall consist of a Presiding Officer and such number of Judicial Members (JM) and Technical Members

(TM) as CG may determine, by notification, to exercise the powers and discharge the functions conferred

on SAT under this Act or any other law for the time being in force.

2) Subject to the provisions of this Act,—

(i) the jurisdiction of SAT may be exercised by Benches thereof;

(ii) a Bench may be constituted by the PO of SAT with 2 or more JM/TM as he may deem fit:

Provided that every Bench constituted shall include at least one JM and one TM;

(iii) The Benches of SAT shall ordinarily sit at Mumbai and may also sit at such other places as CG may,

in consultation with the Presiding Officer, notify.

3) Notwithstanding anything contained in sub-section (2), the PO may transfer a JM or a TM of SAT from one

Bench to another Bench.

Qualification for appointment as Presiding Officer (PO)/member of SAT - Sec.15M –

(1)Person not qualified for appointment as PO of SAT unless he is – a) A sitting/retired Judge of SC or a

sitting/retired Chief Justice of a HC; or b) A sitting/retired Judge of a HC who has completed ≥ 7 years of

service as a HC Judge. (1A) PO shall be appointed by CG in consultation with Chief Justice of India/his

nominee; (2) Person not qualified for appointment as member of SAT unless he is - a person of ability, integrity

& standing who has shown capacity in dealing with problems relating to securities market & has qualification

& experience of corporate law, securities laws, finance, economics or accountancy. Provided that - Member of

the Board or any person at senior management level equivalent to Executive Director in the Board shall not be

appointed as PO/Member of SAT during his service/tenure as such with the Board or ≤ 2 years from the date

on which he ceases to hold office as such in the Board.

Appointment of Presiding Officer and Judicial Members - Section 15MA

The PO & JMs of SAT shall be appointed by CG in consultation with Chief Justice of India or his nominee.

Search-cum-Selection Committee for appointment of Technical Members - Section 15MB

(1) The TMs of SAT shall be appointed by CG on recommendation of a Search-cum-Selection Committee

consisting of the following, namely :--

a) Presiding Officer, SAT—Chairperson;

b) Secretary, Department of Economic Affairs—Member;

c) Secretary, Department of Financial Services—Member; and

d) Secretary, Legislative Department or Secretary, Department of Legal Affairs—Member.

(2) The Secretary, Department of Economic Affairs shall be Convener of Search-cum-Selection Committee.

(3) The Search-cum-Selection Committee shall determine its procedure for recommending the names of

persons to be appointed under sub-section (1).



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Vacancy not to invalidate selection proceeding - Section 15MC

a) No appointment of PO, a JM/TM of SAT shall be invalid merely by reason of any vacancy or any defect in

constitution of Search-cum-Selection Committee.

b) A member or part time member of Board/IRDA/ PFRDA, or any person at senior management level

equivalent to Executive Director in Board or in such Authorities, shall not be appointed as PO/Member of

SAT, during his service or tenure as such with Board or with such Authorities, as the case may be, or

within 2 years from date on which he ceases to hold office as such in Board or in such Authorities.

The PO or such other member of SAT, holding office on date of commencement of Part VII of Chapter VI of the

Finance Act, 2017 shall continue to hold office for such term as he was appointed & other provisions of this Act

shall apply to such PO or such other member, as if Part VII of Chapter VI of Finance Act, 2017 had not been

enacted.

Tenure of office of Presiding Officer, Judicial or Technical Members of SAT - Section 15N

PO or every JM or TM of SAT shall hold office for 5 years from the date on which he enters upon his office,

and shall be eligible for reappointment for another term of maximum 5 years.

Provided that: No PO or JM or TM shall hold office after he has attained the age of 70 years.

Appeal to SAT - Sec.15T –

a) Appeal to Whom? - SAT having jurisdiction in the matter; 1) Who may appeal? - Any person aggrieved by

an order of – (a) SEBI or (b) AO or (c) IRDA or PFRDA; 2) Omitted

3) Time limit of filing the appeal - ≤ 45 days from date of receipt of order of SEBI/AO/IRDA/PFRDA; SAT can

accept appeal after the said period if sufficient cause is shown [Total period = 45 Days + Extension];

4) Powers of Authority to whom the appeal made - SAT may, after giving parties opportunity of being heard,

pass order - Confirming, Modifying or Setting aside the order appealed against;

5) SAT send copy of Oder to SEBI/AO/IRDA/PFRDA;

6) Time Limit for disposing off the case - Appeal shall be dealt with as expeditiously as possible, and

endeavour shall be made by it to dispose of the appeal finally ≤ 6 months from date of receipt of appeal.

AMENDMENT- 20

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009

Definitions (Regulation 2) 2(d) - Application Supported by Blocked Amount (ASBA)

Application for subscribing to public issue or rights issue, along with authorisation to Self Certified Syndicate

Bank to block application money in bank account

2(n) - Further Public Offer (FPO)

Offer of specified securities by listed issuer to public for subscription & includes offer for sale of specified

securities to public by any existing holders of securities in listed issuer

2(p) - Initial Public Offer (IPO)

Offer of specified securities by unlisted issuer to public for subscription & includes offer for sale of specified

securities to public by any existing holders of such securities in unlisted issuer

2(ze)- Retail Individual Investor (RII)

Investor who applies or bids for specified securities for value of ≤ ` 2 lakhs



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2(zd)“qualified institutional buyer”

(i) a mutual fund, venture capital fund [, Alternative Investment Fund] and foreign venture capital investor

registered with the Board;

(ii) a [foreign portfolio investor other than Category III foreign portfolio investor], registered with the

Board;

(iii) a public financial institution as defined in section 4A of the Companies Act, 1956;

(iv) a scheduled commercial bank;

(v) a multilateral and bilateral development financial institution;

(vi) a state industrial development corporation;

(vii) an insurance company registered with the Insurance Regulatory and Development Authority;

(viii) a provident fund with minimum corpus of twenty five crore rupees;

(ix) a pension fund with minimum corpus of twenty five crore rupees;

(x) National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of

the Government of India published in the Gazette of India;

(xi) insurance funds set up and managed by army, navy or air force of the Union of India;

(xii) insurance funds set up and managed by the Department of Posts, India;

(xiii) systemically important non-banking financial companies.

2(q) - Issue Size & offer through offer document

a)Issue Size" includes offer through offer document ( OTOD) & promoters' contribution. (PC) b) offer through

offer document Means net offer to public & reservations. Issue Size = OTOD + PC OTOD= NOTP +

Reservations as per Reg. 42 Therefore , Issue Size = NOTP + Reservations + PC

2 (zla) “systemically important non-banking financial company”

A non-banking financial company registered with the Reserve Bank of India and having a net-worth of more

than five hundred crore rupees as per the last audited financial statements.

2(zn) - Wilful Defaulter

Issuer who is categorized as wilful defaulter by bank or Fin. Inst. or consortium, as per guidelines on wilful

defaulters issued by RBI & includes issuer whose director/promoter categorized as such.

AMENDMENT - 21

General Conditions - Regulation 4 1. Issuer offering specified securities through public issue or rights issue satisfy conditions at time of filing

draft offer document with Board & registering or filing final offer document with ROC or designated SE

2. No issuer make public issue or rights issue of specified securities:

a) If issuer, promoters/directors/persons in control of issuer debarred from accessing capital mkt. by Board;

b) If promoters, directors/persons in control of issuer/in control of other co. which debarred from accessing

capital market under order or directions made by Board;



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c) [omitted]

d) Unless it made application to one or more RSE for listing of specified securities & has chosen one of them

as designated stock exchange: In case of IPO, issuer make application for listing of securities in at least

one RSE having nationwide trading terminals;

e) Unless entered into agreement with depository for dematerialization of specified securities issued or

proposed to be issued;

f) Unless all existing partly paid-up equity shares of issuer either been fully paid up or forfeited ;

g) Unless firm arrangements of finance through verifiable means towards 75% of stated means of finance.

3. Warrants issued along with public issue or rights issue subject to following - (a) Tenure ≤ 18 months from

date of allotment in public/rights issue; (b) ≤ 1 warrant be attached to one specified security;

(c) Price or Conversion formula of warrants determined upfront and ≥ 25% of consideration amt. be

received upfront; (d) in case warrant holder not exercise option to take equity shares against warrants,

consideration paid in respect of such warrant forfeited by issuer.

4. Amount for general corporate purposes, mentioned in objects of issue in draft offer document filed with

Board, ≤ 25% of amount raised by issuer by issuance of securities.

5. No issuer make, -

i) Public issue of equity securities, if issuer/promoters/directors wilful defaulter; or ii) Public issue of

convertible debt instruments if, - (a) issuer/promoters/directors wilful defaulter; b) in default of payment of

interest/repayment of principal amt. w.r.t debt instruments issued by it to public for > 6 months.

6. Issuer making rights issue of specified securities, make disclosures specified in Part G of Schedule VIII, in

offer document & abridged letter of offer, if issuer or promoters or directors wilful defaulter

7. Promoters/promoter group of issuer, not renounce their rights except to extent of renunciation within

promoter group.

AMENDMENT- 22

Dispatch of Issue Material - Regulation 12

Lead merchant bankers dispatch offer document & other issue material including forms for ASBA to

designated stock exchange, syndicate members, registrar to issue & share transfer agents, DP, stock brokers,

underwriters, bankers to issue, investor & Self Certified Syndicate Banks in advance.

AMENDMENT- 23

Monitoring agency - Regulation 16

(1) If the issue size [excluding the size of offer for sale by selling shareholders,] exceeds [one hundred] crore

rupees, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by a

public financial institution or by one of the scheduled commercial banks named in the offer document as

bankers of the issuer: Provided that nothing contained in this clause shall apply to an issue of specified

securities made by a bank or public financial institution 56[or an insurance company].



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(2) The monitoring agency shall submit its report to the issuer in the format specified in Schedule IX on a

quarterly basis, till at least ninety five percent of the proceeds of the issue, excluding the proceeds under

offer for sale and amount raised for general corporate purposes, have been utilized.

(3) The Board of Directors and the management of the company shall provide their comments on the findings

of the monitoring agency as specified in Schedule IX.

(4) The issuer shall, within forty five days from the end of each quarter, publically disseminate the report of

the monitoring agency by uploading the same on its website as well as submitting the same to the stock

exchange(s) on which its equity shares are listed.

AMENDMENT- 24

Lock-in of specified securities held by persons other than promoters – Regulation 37

In case of an initial public offer, the entire pre-issue capital held by persons other than promoters shall be

locked-in for a period of one year: Provided that nothing contained in this regulation shall apply to:

(a) equity shares allotted to employees under an employee stock option or employee stock purchase scheme of

the issuer prior to the initial public offer, if the issuer has made full disclosures with respect to such options

or scheme in accordance with Part A of Schedule VIII;

(b) equity shares held by a venture capital fund or alternative investment fund of category I [or category II] or

a foreign venture capital investor:

Provided that such equity shares shall be locked in for a period of at least one year from the date of

purchase by the venture capital fund or alternative investment fund or foreign venture capital investor.

Explanation: For the purpose of clause (b), in case such equity shares have resulted pursuant to conversion

of fully paid-up compulsorily convertible securities, the holding period of such convertible securities as

well as that of resultant equity shares together shall be considered for the purpose of calculation of one

year period and convertible securities shall be deemed to be fully paid-up, if the entire consideration

payable thereon has been paid and no further consideration is payable at the time of their conversion.

AMENDMENT- 25

MAX. RESERVATION ON COMPETITIVE BASIS - Regulation 42

1) Issue through BB –

a) Employees excluding promoters- 5% of post issue capital.

b) shareholders (other than promoters) of:- i) listed promoting companies, in case of new issuer & ii) listed

group companies , in case of existing issuer-10% of Issue Size

c) Persons who have business association with issuer as depositors or bondholders making WO- 5% of

issue Size

2) Issue made otherwise than BB: - i) Employees excluding promoters- 5% of post issue capital ii) SH (other

than promoters) of:- listed promoting companies , in case of new issuer, listed group companies in case of

existing issuer- 10% of Issue Size

Provided that in event of under - subscription in employee reservation portion, unsubscribed portion be

allotted on proportionate basis, for value in excess of Rs. 2 lakhs, subject to total allotment to employee

not exceeding Rs. 5 lakhs



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3) In case of a further public offer (not being a composite issue), the issuer may make reservation on

competitive basis out of the issue size excluding promoters’ contribution and net offer to public in favour

of retail individual shareholders of the issuer.

4) The reservation on competitive basis shall be subject to following conditions -

(a) the aggregate of reservations for employees shall not exceed 5%. of the post issue capital of the issuer;

(b) reservation for shareholders shall not exceed 10%. of the issue size;

(c) reservation for persons who as on the date of filing the draft offer document with the Board, have

business association as depositors, bondholders and subscribers to services with the issuer making an

initial public offer shall not exceed 5%. of the issue size;

(d) no further application for subscription in the net offer to public category shall be entertained from any

person (except an employee and retail individual shareholder) in favour of whom reservation on

competitive basis is made;

(e) any unsubscribed portion in any reserved category may be added to any other reserved category and

the unsubscribed portion, if any, after such inter-se adjustments among the reserved categories shall be

added to the net offer to the public category;

(f) in case of under-subscription in the net offer to the public category, spill-over to the extent of under-

subscription shall be permitted from the reserved category to the net public offer category;

(g) value of allotment to any employee in pursuance of reservation made under sub regulations (1) or (2),

as the case may be, shall not exceed ` 2 lakhs.

Provided that in the event of under-subscription in the employee reservation portion, the unsubscribed

portion may be allotted on a proportionate basis, for a value in excess of ` 2 lakhs , subject to the total

allotment to an employee not exceeding ` 5 lakhs.

5) In the case of reserved categories, a single applicant in the reserved category may make an application for a number of specified securities which exceeds the reservation. Explanation: For the purposes of this regulation: (II) The term "reservation on competitive basis” means reservation wherein specified securities are

allotted in proportion of the number of specified securities applied for in respect of a particular reserved category to the number of specified securities reserved for that category;

(III) The term “new issuer” means an issuer which has not completed twelve months of commercial operation and its audited operative results are not available.

AMENDMENT- 26

ABRIDGED PROSPECTUS, ABRIDGED LETTER OF OFFER AND ASBA - Regulation 58

(1) Abridged prospectus contain as specified in Part D of Schedule VIII. (2) Abridged letter of offer contain disclosures as specified in Part F of Schedule VIII. (3) Abridged prospectus & abridged letter of offer not contain matter extraneous to contents of offer document. (4) Every application form including ASBA form distributed by issuer or other person in relation to issue

accompanied by copy of abridged prospectus or abridged letter of offer, as case may be.

(5) In all, -

(i) Public issues, issuer accept bids using only ASBA facility in manner specified by Board;

(ii) Rights issues, not more than one payment option given, issuer provide facility of ASBA in accordance

with procedure & eligibility criteria specified by Board.

Provided that

In case of qualified institutional & non-institutional investors issuer accept bids using ASBA facility only.



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AMENDMENT – 27

POST-ISSUE REPORTS - Regulation 65

(1) In public issue, lead merchant banker submit final post-issue report specified in Part C of Schedule XVI,

≤ 7 days of date of finalization of basis of allotment or ≤ 7 days of refund in case of failure of issue.

(2) In rights issue, lead merchant banker submit post-issue reports as follows:-

(a) initial post issue report specified in Part B of Schedule XVI, ≤ 3 days of closure of issue;

(b) final post issue report specified in Part D of Schedule XVI, ≤ 15 days of date of finalization of basis

of allotment or ≤ 15 days of refund of money in case of failure of issue.

Lead merchant banker submit due diligence certificate as per format specified in Form G of Schedule VI,

along with final post issue report.

AMENDMENT- 28

CONDITIONS & MANNER OF PROVIDING EXIT OPPORTUNITY TO DISSENTING SHAREHOLDERS

(i) In SEBI (ICDR) Regulation, 2009, chapter VI-A inserted. This read with sec. 13(8) & 27(2) of Co. Act, 2013.

(ii) Sec. 13(8) of Co. Act, 2013 deals with co. which raised money from public through prospectus & still have

unutilized amount out of money so raised.

(iii) Sec. 27(2) deals with dissenting shareholders who not agreed to proposal to vary terms of contracts or

objects & given to them exit offer in manner & conditions as prescribed by SEBI in regulation.

(a) Regulation 69F - Manner of providing exit to dissenting shareholders.

(i) Notice proposing passing of SR for changing objects of issue & varying terms of contract, referred in

prospectus also contain information about exit offer to dissenting shareholders.

(ii) In addition to disclosures required u/s 102 of Co. Act, 2013 with rule 32 of Co. (Incorporation)

Rules, 2014 & rule 7 of Co. (Prospectus & Allotment of Securities) Rules, 2014 & other applicable law,

statement to effect that promoters or shareholders having control provide exit opportunity to

dissenting shareholders also included in explanatory statement to notice for passing SR.

(iii) After passing of SR, issuer submits voting results to recognised stock exchange, in terms of provisions

of regulation 44(3).

(iv) Issuer also submit list of dissenting shareholders, certified by compliance officer, to RSE(s).

(v) Promoters or shareholders in control, appoint merchant banker registered with Board & finalize exit

offer price in accordance with these regulations.

(vi) Issuer intimate RSE about exit offer to dissenting shareholders & price at which such offer given.

(vii) RSE immediately on receipt of intimation disseminate same to public ≤ 1 working day.

(viii) Ensure security for performance of obligations, promoters or shareholders having control, as

applicable, create escrow account interest bearing & deposit aggregate consideration in account ≥ 2

working days prior to opening of tendering period.

(ix) tendering period start not later than 7 working days from passing of SR & open for 10 working days.

(x) Dissenting shareholders who tendered their shares in acceptance of exit offer have option to withdraw

such acceptance till date of closure of tendering period.

(xi) Promoters or shareholders having control facilitate tendering of shares by shareholders & settlement

of same through RSE mechanism specified by SEBI for purpose of takeover, buy-back & delisting.



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(xii) Promoters or shareholders having control, within 10 working days from last date of tendering period,

make payment of consideration to dissenting shareholders who accepted exit offer.

(xiii) Within 2 working days from payment of consideration, issuer furnish to RSE, disclosures giving details

of aggregate number of shares tendered, accepted, payment of consideration & post-offer shareholding

pattern of issuer & report by merchant banker that payment duly made to all dissenting shareholders

whose shares accepted in exit offer.

Regulation 69G-Offer not to exceed maximum permissible non-public shareholding.

In event, shares accepted in exit offer were such that shareholding of promoters or shareholders in control,

taken together with persons acting in concert with them pursuant to completion of exit offer results in

their shareholding exceeding maximum permissible non-public shareholding, promoters or shareholders

in control, as applicable, required to bring down non-public shareholding to level specified & within time

permitted under Securities Contract (Regulation) Rules, 1957

AMENDMENT- 29

REGULATION NOT APPLICABLE IF PI IS MADE – Regulation 70 –

(1) (a) Conversion of loan/option attached to convertible debt instruments as par Sec. 62 (3) of Cos. Act, 2013 (b) Scheme approved by HC u/s 391 to 394 of the Co Act, 1956 or Tribunal u/s 230 to 234 of Companies Act,

2013, whichever applicable. Provided that: Pricing provisions of this Chapter shall apply to issuance of shares under schemes in clause (b) above where allotment of shares only to a select group of shareholders/shareholders of unlisted Co’s as per such schemes;

(c) Rehabilitation scheme approved by BIFR or Tribunal under IBC, 2016, whichever applicable. (2) Provision of this chapter relating to pricing &lock-in shall not apply to equity shares alloted to any Fin.

Inst. within Sec. 2(h)(ia) and (ii) of Recovery of Debts due to Banks & Fin. Institution Act, 1993.

(3) Provisions of regulation 73 & 76 shall not apply to a preferential issue of equity shares & compulsorily

convertible debt instruments, whether fully or partly, where Board has granted relaxation to issuer as per

Regulation 29A of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997, or Regulation

11 of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011, whichever applicable, if

adequate disclosures about plan & process proposed to be followed for identifying allottees are given in

explanatory statement to notice for GM of shareholders.

(4) The provisions of sub-regulation (2) of regulation 72 and sub-regulation (6) of regulation 78 shall

not apply to a preferential issue of specified securities where the proposed allottee is a Mutual

Fund registered with the Board or Insurance Company registered with Insurance Regulatory and

Development Authority [of India or a Scheduled Bank listed under the Second Schedule of the

Reserve Bank of India Act, 1934 or a Public Financial Institution as defined in clause 72 of section

2 of the Companies Act, 2013]

(5) The provisions of this Chapter shall not apply where the preferential issue of specified securities is made to the lenders pursuant to conversion of their debt, as part of a debt restructuring scheme implemented in accordance with the guidelines specified by the RBI, subject to the following conditions:



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(a) the guidelines for determining the conversion price have been specified by the Reserve Bank of India in accordance with which the conversion price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

(b) the conversion price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder: Provided that till such date on which section 247 of the Companies Act, 2013 and the relevant Rules come into force, valuer shall mean an independent merchant banker registered with the Board or an independent chartered accountant in practice having a minimum experience of ten years;

(c) specified securities so allotted shall be locked-in for a period of one year from the date of their allotment: Provided that for the purpose of transferring the control, the lenders may transfer the specified securities allotted to them before completion of the lock-in period subject to continuation of the lock-in on such securities for the remaining period, with the transferee;

(d) the lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked-in;

(e) the applicable provisions of the Companies Act, 2013 are complied with, including the requirement of special resolution.]

(6) The provisions of this Chapter shall not apply where the preferential issue, if any, of specified securities is

made to person(s) at the time of lenders selling their holding of specified securities or enforcing change in

ownership in favour of such person(s) pursuant to a debt restructuring scheme implemented in accordance

with the guidelines specified by the RBI, subject to the following conditions:

(a) the guidelines for determining the issue price have been specified by the RBI in accordance with which the

issue price shall be determined and which shall be in compliance with the applicable provisions of the

Companies Act, 2013;

(b) the issue price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall

be a person who is registered u/s 247 of the Companies Act, 2013 and the relevant Rules framed thereunder:

Provided that till such date on which section 247 of the Companies Act, 2013 and the relevant Rules come

into force, valuer shall mean an independent merchant banker registered with the Board or an independent

chartered accountant in practice having a minimum experience of ten years;

(c) the specified securities so allotted shall be locked-in for a period of at least three years from the date of

their allotment;

(d) the lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential

basis shall be reduced to the extent the convertible securities have already been locked-in;

(e) a special resolution has been passed by shareholders of the issuer before the preferential issue;



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(f) the issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other

applicable law, disclose the following information pertaining to the proposed allottee(s) in the explanatory

statement to the notice for GM proposed for passing the special resolution as stipulated at clause

(e) of this subregulation:

a) the identity including that of the natural persons who are the ultimate beneficial owners of the shares

proposed to be allotted and/ or who ultimately control the proposed allottee(s);

b) the business model;

c) a statement on growth of business over the period of time; d. summary of audited financials of

previous three financial years;

d) track record in turning around companies, if any;

e) the proposed roadmap for effecting turnaround of the issuer.

f) the applicable provisions of the Companies Act, 2013 are complied with.]

AMENDMENT- 30

DISCLOSURES (Regulation 73)

(1) Issuer in addition to disclosures required u/s 173 of Co. Act, 1956 or other applicable law, disclose

following in explanatory statement to notice for GM proposed for passing SR:

(a) objects of preferential issue;

(b) proposal of promoters, directors or KMP of issuer to sub- scribe to offer;

(c) shareholding pattern of issuer before & after preferential issue;

(d) time within which preferential issue completed;

(e) identity of natural persons who are ultimate beneficial owners of shares proposed to be allotted &

who ultimately control proposed allottees, percentage of post preferential issue capital that held by

them & change in control, in issuer consequent to preferential issue. Provided that If there is listed co.,

mutual fund, bank or insurance co. in chain of ownership of proposed allottee, no further disclosure necessary.

(f) undertaking that issuer re-compute price of specified securities in terms of provision of these

regulations where required to do so;

(g) undertaking that if amount payable on account of re-computation of price not paid within time

stipulated in these regulations, specified securities continue to be locked in till time such amount paid

by allottees.

(h) disclosures, similar to disclosures specified in Part G of Schedule VIII, if issuer or any of its promoters

or directors willful defaulter.

(2) issuer place copy of certificate of its statutory auditor before GM of shareholders, considering proposed

preferential issue, certifying that issue made in acc. with requirements of these regulations.



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(3) Where specified securities issued on preferential basis to promoters, their relatives, associates & related

entities for consideration other than cash, valuation of assets in consideration for which equity shares

issued done by independent qualified valuer, which submitted to RSE where equity shares of issuer listed.

Provided that: If RSE not satisied with appropriateness of valuation, it get valuation done by other valuer & obtain

any info., deemed necessary, from issuer.

(4) SR specify relevant date on basis of which price of equity shares allotted on conversion or exchange of

convertible securities calculated.

Explanation: For the purpose of sub-regulation (3), the term ‘valuer’ has the same meaning as is assigned

to it under clause (r) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India

(Issue of Sweat Equity) Regulations, 2002.

AMENDMENT- 31

PLACEMENT DOCUMENT - Regulation 84

(1) Qualified institutions placement made on basis of placement document which contain all material info.,

including those specified in Sch. XVIII & disclosures similar to disclosures specified in Part G of Sch. VIII

made, if applicable.

(2) Placement document serially numbered & copies circulated only to select investors.

(3) Issuer , while seeking in-principle approval from RSE, furnish copy of placement document, certificate

confirming compliance with provisions of this Chapter along with any other documents required by stock

exchange.

(4) Placement document placed on website of concerned stock exchange & of issuer with disclaimer to effect

that in connection with qualified institutions placement & no offer being made to public or any other

category of investors Copy of placement docs filed with Board for record ≤ 30 days of allotment of eligible

securities.(omitted)

AMENDMENT- 32

Liability for contravention of Act, rules or regulations - Regulation 111A –

1) Listed entity/any other person who contravenes any provisions of these regulations, shall, in addition to

liability for action in terms of securities laws, be liable for following actions by respective stock

exchange(s), in manner specified in circulars/guidelines issued by Board –

a) imposition of fines;

b) suspension of trading;

c) Freezing of promoter/promoter group holding of designated securities, as may be applicable, in

coordination with depositories;

d) any other action specified by Board from time to time.

2) Manner of revocation of actions specified in sub-regulation (1)(b) & (c), as specified in circulars/ guidelines

issued by Board.

Failure to pay fine - Regulation 111B

If listed entity fails to pay any fine imposed upon it by RSE(s), within period specified from time to time,

stock exchange may initiate other action as per law, after giving notice in writing.



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AMENDMENT- 33

Power to relax strict enforcement of the regulations - Regulation 113

1. Board may, in interest of investors/for development of securities market, relax strict enforcement of any

requirement of these regulations, if Board satisfied that: -

(a) requirement is procedural in nature; or

(b)Any disclosure requirement is not relevant for particular class of industry or issuer; or

(c) Non-compliance was caused due to factors beyond the control of issuer

2. For seeking relaxation under sub-regulation (1), an application, giving details & grounds on which such

relaxation has been sought, shall be filed with Board

Application referred to under sub-regulation (2) be accompanied by non-refundable fee of Rs. 1 lakh payable

by way of direct credit in bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI or by

way of DD in favour of Board payable in Mumbai

AMENDMENT - 34

Possession & Retention of Foreign Exchange – Regulation 3 of Foreign Exchange Management (Possession

& Retention of Foreign Currency) Regulations, 2000 - (a) Auth. Persons possess foreign currency & coins

without restriction; (b)Any person possess foreign coins without restriction; (c) Any PRI permitted to retain in

aggregate foreign currency ≤ USD 2,000 or its equivalent in form of currency notes/bank notes/TC acquired

by him;

Regulation 4 - A PRI but not permanently resident in India possess foreign currency without any limit in

form of currency notes, bank notes, TCs, if such foreign currency was acquired, held/owned by him when he

was PROI, & has brought into India as per Regulations.

Prohibition :-

Save as otherwise provided in the Act, rules or regulations made thereunder,

a) no person shall undertake or sell or draw foreign exchange to or from an authorised person for any capital

account transaction,

b) no person resident outside India shall make investment in India , in any form, in any company or

partnership firm or proprietary concern or any entity, whether incorporated or not, which is engaged or

proposes to engage -

i) in the business of chit fund, or

ii) as Nidhi Company , or

iii) in agricultural or plantation activities or

CHAPTER 20 - FOREIGN EXCHANGE MANAGEMENT ACT, 1999



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T iv) in real estate business, or construction of farm houses or

v) in trading in Transferable Development Rights (TDRs).

Explanation: For the purpose of this regulation, 'real estate business' shall not include development of

townships, construction of residential/commercial premises, roads or bridges.

AMENDMENT - 35

FOREIGN EXCHANGE MANAGEMENT (ACQUISITION & TRANSFER OF IMMOVABLE PROPERTY

OUTSIDE INDIA) REGULATIONS, 2015 (Newly inserted regulation)

(1) Person resident in India acquire immovable property outside India, - (a) by way of gift or inheritance

from person us/ 6(1) of Act, or clause (b) of regulation 4 (acquired by person resident in India on or

before 8th July 1947 & continued by him with permission of Reserve Bank) – (i) by way of purchase out of

foreign exchange held in RFC account maintained in accordance with Foreign Exchange Management

Regulations, 2015; (ii) jointly with relative person resident outside India, provided no outflow funds

from India;

(2) Person resident in India acquire immovable property outside India, by way of inheritance or gift from

person resident in India who acquired property in accordance with foreign exchange provisions in force at

time of acquisition.

(3) Co. inc. in India having overseas offices, acquire immovable property outside India for business &

residential purposes of staff, in accordance with direction issued by RBI from time to time.

Explanation : ‘relative’ in relation to individual means husband, wife, brother or sister or lineal

ascendant or descendant of that individual.

AMENDMENT - 36

FOREIGN EXCHANGE MANAGEMENT (EXPORT OF GOODS & SERVICES) REGULATIONS, 2015 (Newly inserted regulations)

(2) Definitions - (a) (i) ‘export’ includes taking or sending out of goods by land, sea or air, consignment or way of sale, lease, hire-purchase, or under other arrangement by whatever name called, & in case of software, includes transmission through electronic media; (ii) ‘export value’ in relation to export by way of lease or hire-purchase or under any other similar arrangement, includes charges, by whatever name called, payable in respect of such lease or hire-purchase or other similar arrangement; (iii) ‘form’ means form annexed to these Regulations; (iv)‘software’ means computer programme, database, drawing, design, audio/video signals, any information by whatever name called in or on any medium other than physically .(v) ‘specified authority’ means person/authority to whom declaration in Regulation 3 furnished;

(3) Declaration of exports –

(1) In case of exports taking place through Customs manual ports, every exporter of goods or software in

physical form or other form, either directly or indirectly, to any place outside India, other than Nepal &

Bhutan, furnish to specified authority, declaration in forms set out in Schedule & supported by evidence as

specified, containing true & correct material particulars including amount representing – (i) full export

value of goods or software; or (ii) if full export value not ascertainable, value which exporter, having



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regard to prevailing market conditions expects to receive on sale of goods or software in overseas

market, & affirms in said declaration that full export value of goods or software within specified period

paid in specified manner

(2) Declarations shall be executed in sets of such number as specified.

(3) For removal of doubt, it is clarified that, in respect of export of services to which none of the Forms

specified in these Regulations apply, the exporter may export such services without furnishing any

declaration, but shall be liable to realise the amount of foreign exchange which becomes due or accrues on

account of such export, and to repatriate the same to India in accordance with the provisions of Act, and

these Regulations, as also other rules & regulations made under Act.

(4) Realization of export proceeds in respect of export of goods /software from third party should be duly

declared by exporter in appropriate declaration form Exemptions- Already covered in Volume 2

(4) Indication of importer-exporter code number:- importer-exporter code number allotted by Director

General of Foreign Trade u/s 7 of Foreign Trade (Development & Regulation) Act, 1992 indicated on all

copies of declaration forms submitted by exporter to specified authority & all correspondence of exporter

with authorised dealer or Reserve Bank..

(5) Authority to whom declaration to be furnished & manner of dealing with declaration:-

(A) Declaration in Form EDF – (i) declaration in form EDF be submitted in duplicate to Commissioner of

Customs. (ii) After duly verifying & authenticating declaration form, Commissioner of Customs

forward original declaration form/data to nearest office of RBI & hand over duplicate form to

exporter for submitted to authorised dealer.

(B) Declaration in Form SOFTEX - declaration in Form SOFTEX w.r.t export of computer software &

audio/video/television software submitted in triplicate to designated official of Ministry of IT, GOT at

software technology parks of park of India or at Free Trade Zones or Special Economic Zones in India.

(a) After certifying all 3 copies of SOFTEX form, designated official forward original directly to

nearest office of RBI & return duplicate to exporter. triplicate be retained by designated official for

record.

(C) Duplicate Declaration Forms to be retained with Authorised Dealers - On realisation of export

proceeds, duplicate copies of export declaration forms viz. EDF & SOFTEX & Exchange Control

copies of shipping bills be retained by Authorised Dealers.

7. Evidence in support of declaration:- Commissioner of Customs or postal authority or official of Department of Electronics, to whom

declaration form submitted, , in order to satisfy themselves of due compliance with Sec.7 of Act &

these regulations, require such evidence in support of declaration as establish that – (a) exporter a

person resident in India & has a place of business in India; (b) destination stated on declaration final

place of destination of goods exported; (c) value stated in declaration represents – (i) full export

value of goods or software; or (ii) where full export value of goods or software not ascertainable at

time of export, value which exporter, regard to prevailing market conditions expects to receive sale of

goods in overseas market. Explanation - ‘final place of destination’ means place in country in which goods

ultimately imported & cleared through Customs of that country.



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8. Manner of payment of export value of goods:-

Unless otherwise authorised by Reserve Bank, amount representing full export value of goods exported

be paid through authorised dealer in manner specified in Foreign Exchange Management (Manner of

Receipt & Payment) Regulations, 2000 as amended from time to time.

Explanation: re-import into India, within period specified for realisation of export value, of exported goods in respect of which declaration made under Regulation 3, deemed to be realisation of full export value of such goods.

9. Period within which export value of goods/software/ services to be realised:- (1) Amount representing full export value of goods/software/services exported be realised &

repatriated to India within 9 months from date of export, provided – (i) where goods exported to a

warehouse established outside India with permission of Reserve Bank, amount representing full

export value of goods exported paid to authorised dealer as it realised & in case within 10 months

from date of shipment of goods; (ii) further that Reserve Bank, or subject to directions issued by that

Bank in this behalf, authorised dealer , for a sufficient & reasonable cause shown, extend period of

9 months or if 10 months, as case be.

(2) (a) Where export of goods / software / services made by Units in Special Economic Zones (SEZ) /

Status Holder exporter / Export Oriented Units (EOUs) & units in Electronics Hardware Technology

Parks (EHTPs), Software Technology Parks (STPs) & Bio-Technology Parks (BTPs) as defined in

Foreign Trade Policy in force, then notwithstanding anything con- trained in sub-regulation (1),

amount representing full export value of goods or software be realised & repatriated to India within

9 months from date of export. Provided further that - Reserve Bank, or subject to directions issued by

Bank in this behalf, authorised dealer , for sufficient & reasonable cause shown, extend period of 9

months.

(b) Reserve Bank for reasonable & sufficient cause direct that exporter/s cease governed by sub-

regulation (2); Provided that - No direction be given unless unit given reasonable opportunity to make representation in matter.

(c) On such direction, said exporter/s governed by provisions of sub-regulation (1), until directed otherwise by Reserve Bank.’ Explanation - “date of export” in relation to export of software in other than physical form, deemed to date of invoice covering such export.

10. Submission of export documents:-

documents pertaining to export be submitted to authorised dealer mentioned in relevant export

declaration form, ≤ 21 days from date of export, or date of certification of SOFTEX form:

Provided that, - Subject to directions issued by Reserve Bank from time to time, authorized dealer

accept documents pertaining to export submitted after expiry of 21 days, for reasons beyond control

of exporter.

11. Transfer of documents:-

Without prejudice to Regulation 3, authorised dealer accept, for negotiation or collection, shipping

documents including invoice & bill of exchange covering exports, from his constituent

Provided that before accepting such documents for negotiation or collection, authorised dealer –

(a) where value declared in declaration not differ from value shown in documents negotiated or sent

for collection, or (b) where value declared in declaration less than value shown in documents

negotiated or sent for collection, require constituent concerned also to sign such declaration & such

constituent bound to comply with requisition & constituent signing declaration considered to exporter

for purposes of Regulations to extent of full value shown in documents negotiated or sent for

collection & be governed by these Regulations accordingly.



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12. Payment for Export:- In respect of export of any goods or software for which declaration required to furnished under

Regulation 3, no person except with permission of Reserve Bank or, subject to directions of Reserve

Bank, permission of authorised dealer, do or refrain from doing anything or take or refrain from taking

any action which effect of securing –

(i) payment for goods or software made otherwise than in specified manner; or

(ii) payment delayed beyond period specified under these Regulations; or

(iii) proceeds of sale of goods or software exported do not represent full export value of goods or

software subject to such deductions, if any, as be allowed by Re- serve Bank or, subject to directions

of Reserve Bank, by an authorised dealer;

Provided that - No proceedings in respect of contravention of these provisions be instituted unless

specified period has expired & payment for goods or software representing full export value, or

value after deductions allowed under clause (iii), has not made in specified manner within

specified period.

(iv) Export of services to which no Form specified in these Regulations apply, exporter export such

services without furnishing any declaration, (i), (ii) & (iii) above apply.

13. Certain Exports requiring prior approval:-

Exports under trade agreement/rupee credit etc.

(i) Export of goods under special arrangement between CG & Govt. of foreign state, or under rupee

credits extended by CG to Govt. of foreign state governed by t/c set out in relative public notices

issued by Trade Control Authority in India & instructions issued from time to time by Reserve Bank.

(ii) export under line of credit extended to bank or financial institution operating in foreign state by

Exim Bank for financing exports from India, governed by t/c advised by Reserve Bank to

authorised dealers from time to time

14. Delay in Receipt of Payment:-

Where in relation to goods or software export of which required to be declared on specified form &

export of services, in respect of which no declaration forms made applicable, specified period has

expired & payment therefor has not made as aforesaid, Reserve Bank give to any person who has

sold goods or software or who entitled to sell goods or software or procure sale thereof, such

directions as appear to it to be expedient, for purpose of securing,

(a) payment therefor if goods or software sold &

(b) sale of goods & payment thereof, if goods or software has not sold or reimport thereof into India

as circumstances permit, within such period as Reserve Bank specify in this behalf ;

Provided that omission of Reserve Bank to give directions not have effect of absolving person

committing contravention from consequences thereof.

15. Advance payment against exports:-

(1) Where an exporter receives advance payment (with or without interest), from a buyer / third party

named in export declaration made by exporter, outside India, exporter be under an obligation to ensure

that – (a) shipment of goods made within one year from date of receipt of advance payment;

rate of interest, if any, payable on advance payment does not exceed rate of interest London Inter-Bank

Offered Rate (LIBOR) + 100 basis points & (b) documents covering shipment routed through authorised

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Provided that in event of exporter’s inability to make shipment, partly or fully, within one year from date of receipt of advance payment, no remittance towards refund of unutilized portion of advance payment or towards payment of interest, be made after expiry of period of one year, without prior approval of Reserve Bank.

(2) Notwithstanding anything contained in clause (i) of sub-regulation (1), an exporter receive advance payment where export agreement itself duly provides for shipment of goods ex- tending beyond period of one year from date of receipt of advance payment.

16. Issue of directions by Reserve Bank in certain cases:-

(1) Without prejudice to provisions of Regulation 3 in relation to export of goods or software which

required to be declared, Reserve Bank , for purpose of ensuring that full export value of goods or,

as case be, value which exporter having regard to prevailing market conditions expects to receive

on sale of goodssoft/ware in overseas market, received in proper time & without delay, by

general/special order, direct from time to time that in respect of export of goods/software to any

destination or any class of export transactions or any class of goods or software or class of exporters,

exporter , prior to export, comply with conditions as be specified in order, namely ;

(a) that payment of goods or software covered by an irrevocable letter of credit or by such other

arrangement/document as be indicated in order ; (b) that any declaration to be furnished to

specified authority be submitted to authorised dealer for its prior approval, which , having regard

to circumstances, be given or withheld or be given subject to such conditions as be specified by

Reserve Bank by directions issued from time to time. (c) that a copy of declaration to be furnished to

specified authority be submitted to such authority or organisation as be indicated in order for

certifying that value of goods or software specified in declaration represents proper value thereof.

(2) No direction under sub-regulation (1) be given by Reserve Bank & no approval under clause (b) of

that sub-regulation be withheld by Authorised Dealer, unless exporter given a reasonable

opportunity to make a representation in matter.

17. Project exports:-

(1) Where an export of goods or services proposed to be made on deferred payment terms or in

execution of a turnkey project or a civil construction contract, exporter, before entering into any such

export arrangement, submit proposal for prior approval of approving authority, which consider

proposal in accordance with guidelines issued by RBI from time to time.

(2) In case a guarantee required to be given prior to post award approval, same be-sued by an

authorized dealer bank/ a person resident in India being an exporting Co., for performance of a

project outside India, or for availing of credit facilities, whether fund-based or non-fund based,

from a bank or a FI outside India in connection with execution of such project, provided that

contract/Letter of Award stipulates such requirements.

Explanation: - For purpose of this Regulation, ‘approving authority’ means EXIM Bank of India or

authorised dealer



AMENDMENT - 37

COMBINATION (REGULATION & INQUIRY) Sec. 5

Meaning - 'Combination' include acquisition of ≥ 1 enterprises by ≥ 1 persons, merger/amalgamation, where

parties satisfy prescribed monetary thresholds & involves 1) any acquisition of control, shares, voting rights or

assets of any enterprise. 2) Merger or amalgamation of enterprises 3) acquisition of control by person, where

person already direct/indirect control over another enterprise in similar or identical or substitutable business.

Regulation - No person or enterprise enter into combination which causes an appreciable adverse effect on

competition within relevant market In India (AAECI) & such combination void. Any person or enterprise,

proposes to enter into combination give notice to Commission, in specified form, & fee determined by

regulations, disclosing details ≤ 30 DAYS of Approval of proposal or Execution of agreement

Inquiry into Combination - Commission, on receipt of notice, inquire whether combination referred

caused adverse effect AAECI. (Commission not initiate any inquiry after expiry of 1 yr. on date

combination effect). On Mar./4/2016, CG issued notifications pertaining to Statutory thresholds for

purposes of “combinations” u/s 5 of Competition Act, 2002

1. Increase in thresholds: Pursuant to Notification No. S.O. 675 (E) dated March 4, 2016 value of assets & value of turnover enhanced by 100% for Sec. 5.

THRESHOLDS FOR FILING NOTICE

Assets Turnover

Enterprise

Level

India > 2000 INR crore OR >6000 INR Crore

Worldwide with India leg >USD 1 bn with at least

>1000 INR crore in India

>USD 3 bn With at least


OR

Group

Level

India >8000 INR crore OR >24000 INR Crore

Worldwide with India leg >USD 4 bn with at least


>USD 12 bn With at least


2. Increase in thresholds of De Minimis Exemption: Acquisitions where enterprises whose control,

shares, voting rights or assets being acquired assets of ≤ `350 crore inIndia or turnover ≤ ` 1000

crore in India, exempt from Sec. 5 for 5 years.

CHAPTER 21 - COMPETITION ACT 2002



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AMENDMENT -38

Introduction

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 came

into force on the 21st June, 2002.

Preamble to Act provides that it is Act to regulate securitisation & reconstruction of financial assets &

enforcement of security interest & for matters connected therewith or incidental thereto.

Legal framework for securitisation in India emerged with above enactment. Its purpose is to promote setting

up of asset reconstruction/securitisation co., which supposed to take over Non-Performing Assets

accumulated with banks & PFI.

Special powers under Act given to lenders & asset reconstruction co. to enable them to take over assets of

borrowers without resorting to courts.

AMENDMENT - 39

Important Definitions 1. ASSET RECONSTRUCTION - Sec. 2(b) –

Acquisition by any securitisation co. or reconstruction co. of any right or interest of any bank or financial

institution in any financial assistance for purpose of realization of such financial assistance.

2. ASSET RECONSTRUCTION Company - Sec. 2(ba) –

Means co. registered with RBI u/s 3 for purposes of carrying on business of asset reconstruction or

securitisation, or both;

3. BORROWER - Sec. 2(f)

Any person who has granted financial assistance by bank or financial institution/guarantee/created

mortgage or pledge as security for financial assistance granted by bank or financial institution & includes

person who becomes borrower of securitisation co. or reconstruction co. consequent upon acquisition by it

of any rights or interest of bank or financial institution in relation to such financial assistance or who has

raised funds through issue of debt securities”

4. DEBT – Sec. 2(ha)

It shall have the meaning assigned to it in sec. 2(g) of Recovery of Debts Due to Banks & Fin. Institutions

Act, 1993 and includes –(a) unpaid portion of purchase price of any tangible asset given on

hire/fin.lease/conditional sale/under any other contract; (b) any right, title or interest on any intangible

asset/license/assignment of such intangible asset, which secures the obligation to pay any unpaid portion

of purchase price of such intangible asset/an obligation incurred or credit otherwise extended to enable any

borrower to acquire the intangible asset or obtain licence of such asset.

CHAPTER 25 - THE SARFAESI ACT



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5. DEFAULT - Sec. 2(j) (a) Non-payment of any debt or other amount payable by borrower to secured creditor upon which

account of such borrower classified as NPA in books of account of secured creditor; or (b) Non-payment of any debt or any other amount payable by borrower w.r.t debt securities after notice

of 90 days demanding payment of dues served upon such borrower by debenture trustee or other authority in whose favour security interest is created for benefit of holders of such debt securities;’;

6. Financial Asset - Sec. 2(l) - Means debt or receivables & includes- (i) Claim to any debt or receivables or

part thereof, whether secured/unsecured; or (ii) debt or receivables secured by, mortgage of, or charge

on, immovable property; or (iii) mortgage, charge, hypothecation or pledge of movable property; or (iv)

right or interest in security, whether full or part underlying such debt or receivables; or (v) any beneficial

interest in property, whether movable or immovable, or such debt, receivables, whether interest is

existing, future, accruing, conditional or contingent; or “(va) any beneficial right, title or interest in any

tangible asset given on hire or financial lease or conditional sale or under other contract which secures

obligation to pay unpaid portion of purchase price of such asset or obligation incurred or credit

otherwise provided to enable borrower to acquire such tangible asset; or (vb) any right, title or interest

on any intangible asset or licence or assignment of such intangible asset, which secures obligation to pay

unpaid portion of purchase price of such intangible asset or obligation incurred or credit otherwise

extended to enable borrower to acquire such intangible asset or obtain licence of intangible asset; or”; (vi)

any financial assistance

7. Non-Performing Asset (sec. 2(I)) - Asset or account of borrower, classified by bank or financial

institution as sub-standard, doubtful or loss asset, in accordance with directions or under guidelines

relating to asset classifications issued by RBI

8. SECURED CREDITOR - Sec. 2(zd) means - (i) any bank/ financial institution/any consortium or group of

banks/Fin. Inst. holding any right, title or interest upon any tangible asset or intangible asset as specified

in clause (I); (ii) debenture trustee appointed by any bank/Fin. Inst.; or (iii) an asset reconstruction co.

whether acting as such or managing a trust set up by such asset reconstruction company for the

securitization/reconstruction, as the case may be; or (iv) debenture trustee registered with Board

appointed by any company for secured debt securities; or (v) any other trustee holding securities on behalf

of a bank/fin.inst., in whose favour security interest is created by any borrower for due repayment of any

fin. assistance.

9. Security Interest (Sec. (zf)) - means right, title or interest of any kind, other than specified in sec 31,

upon property created in favour of any secured creditor & includes—

(a) Any mortgage, charge, hypothecation, assignment or any right, title or interest of any kind, on tangible

asset, retained by secured creditor as owner of property, given on hire or f inancial lease or conditional

sale or other contract which secures obligation to pay unpaid portion of purchase price of asset or

obligation or credit provided to enable borrower to acquire tangible asset; or

(b) Such right, title or interest in any intangible asset or assignment or licence of such intangible asset

which secures obligation to pay unpaid portion of purchase price of intangible asset or obligation incurred

or any credit provided to enable borrower to acquire intangible asset or its license.



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AMENDMENT - 40

Registration of asset reconstruction company – Section 3

1. Co. commence or carry on business of securitisation or asset reconstruction only – (a) after obtaining certificate of registration granted under this sec. & (ii) having net owned fund ≥ ` 2 crores or other amount as RBI, by notification, specify.

2. Other conditions fulfilled name - (a) That asset reconstruction co. not incurred losses in any of 3 pr. F/Y;

(b) that such asset reconstruction co. made adequate arrangements for realisation of fin. assets acquired

for purpose of securitisation or asset reconstruction & able to pay periodical returns & redeem on

respective due dates on investments made in co. by qualified buyers or other persons; (c) that directors of

asset reconstruction co. have adequate professional experience in matters related to finance securitisation

& reconstruction; (d) – (deleted) (e) that any of its director not convicted of any offence involving moral

turpitude; (f) that sponsor of asset reconstruction co. is proper person as per criteria as specified in

guidelines issued by Reserve Bank for such persons;”; (g) that asset reconstruction co. complied with/in

position to comply with prudential norms specified by RBI.

Certificate of registration is thereafter granted to asset reconstruction co. to commence or carry on

business of securitisation or asset reconstruction. Prior Approval of the Reserve Bank for the Following

Purposes

Once co. registered as asset reconstruction co. , must obtain prior approval of RBI for following – (a) any substantial change in its management including appointment of any director on BoD of asset reconstruction co. or managing director or CEO thereof”(b) change of location of its registered office (c) change in name. Expression "Substantial change in management" means change in management by way of transfer of shares change affecting sponsorship in co. by way of transfer of shares or amalgamation or transfer of bus. of co.

AMENDMENT - 41

Sec. 5 – Acquisition of Rights or Interest in Financial Assets

(1) Notwithstanding anything contained in agreement or other law any asset reconstruction co. acquire

financial assets of bank or financial institution, —

(a) by issuing debenture or bond or other security in nature of debenture, for consideration agreed upon

between such co. & bank or financial institution, inc. such t&c as agreed upon between them; or (b) by

entering into agreement with such bank or financial institution for transfer of such financial assets to co.

on such t&c agreed upon between them.

(1A) Any document executed by any bank or financial institution in favour of asset reconstruction co.

acquiring financial assets for purposes of asset reconstruction or securitisation exempted from stamp

duty in accordance with provisions of Section 8F of Indian Stamp Act, 1899:

Provided that

Provisions not apply where acquisition of financial assets by asset reconstruction co. for purposes other

than asset reconstruction or securitisation.



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(2) If the bank or FI is lender in relation to any financial assets acquired by asset reconstruction co., such asset

reconstruction co. on acquisition, deemed to be lender & all rights of such bank or FS vest in co. in

relation to such financial assets.

(2A) If bank or financial institution is holding any right, title or interest upon any tangible asset or intangible

asset to secure payment of any unpaid portion of purchase price of such asset or an obligation incurred or

credit otherwise provided to enable borrower to acquire tangible asset or assignment or license of

intangible asset, right, title/interest vest in asset reconstruction co. on acquisition of such assets.

(3) Unless provided, all contracts, deeds, bonds, agreements, powers-of-attorney, grants of legal

representation, permissions, approvals, consents or no-objections under law which relate to said financial

asset & which subsisting or having effect immediately before acquisition of fin. asset & to which

concerned bank or Fin. Inst. is party or which in favour of bank or fin. Inst., after acquisition of fin. assets,

be of as full force & effect against or favour of asset reconst. co., & enforced or acted upon as if, in place of

said bank or fin. Inst., asset reconstruction co., or issued in favour of asset reconst. co.

(4) If, on date of acquisition of financial asset, any suit, appeal or other proceeding of whatever nature relating

to financial asset pending by or against bank or financial institution, provided in sec. 15(1), 3 proviso of

Sick Industrial Companies (Special Provisions) Act, 1985 not abate, or discontinued or prejudicially

affected by reason of acquisition of financial asset by asset reconstruction co., but suit, appeal or other

proceeding continued, prosecuted & enforced by or against asset reconstruction co.

AMENDMENT - 42

Measures for Assets Reconstruction - Section 9

(1) Asset reconstruction co., provide for any one or more of following measures, for purposes of asset

reconstruction, in accordance with the guidelines framed by RBI –

(a) Proper management of bus. of borrower, by change in, or take over of, management of bus. of borrower; (b)

Sale or lease of part or whole of business of borrower; (c) rescheduling of payment of debts payable by

borrower; (d) Enforcement of security interest as per provisions of this Act; (e) Settlement of dues payable by

borrower; taking possession of secured assets in as per Act. (f) Taking possession of secured assets in

accordance with provisions of Act; (g) Conversion of portion of debt into shares of borrower co.:

Provided that

Conversion of any part of debt into shares of borrower co. deemed always to valid, as if provisions in force at

all material times. –

(2) Reserve Bank, determine policy & issue necessary directions including direction for regulation of

management of business of borrower & fees charged.

(3) asset reconstruction co. take measures in accordance with policies & directions of Reserve Bank.



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AMENDMENT - 43

Enforcement of security Interest – Sec. 13

1. Notwithstanding anything in sec. 69 or 69A of Transfer of Property Act, 1882, any security interest created

in favour of secured creditor enforced, without intervention of court/tribunal, by creditor.

2. Where any borrower, who under liability to secured creditor under security agreement, makes any

default in repayment of secured debt or installment, & his account classified by secured creditor as NPA,

then, secured creditor require borrower by notice in writing to discharge in full his liabilities to secured

creditor, ≤ 60 days from date of notice.

Provided that— (a) requirement of classification of secured debt as NPA not apply to borrower who raised

funds through issue of debt securities; & (b) in event of default, debenture trustee entitled to enforce security

interest in same manner as provided with such modifications as necessary & accordance with terms &

conditions of security documents executed in favour of debenture trustee;

3. If borrower fails to discharge his liability in full within above specified period, secured creditor take

recourse to one or more of following measures to recover his secured debt – (a) Take possession of secured

assets of borrower including right to transfer by way of lease, assignment or sale for realising secured

asset; (b) take over management of secured assets of borrower including right to transfer by way of lease,

assignment or sale & realise secured asset; (c) appoint any person to manage secured assets possession of

which taken over by secured creditor; (d) require at any time by notice in writing, person who acquired

any of secured assets from borrower & from whom money due or become due to borrower, to pay secured

creditor, so much of money as sufficient to pay secured debt.

4. Where amount of dues of secured creditor together with all costs, charges & expenses incurred by him

tendered to secured creditor at time before date of publication of notice for public auction or inviting

quotations or tender from public or private treaty for transfer by lease, assignment or sale of secured

assets,— (1) secured assets not transferred by way of lease assignment or sale by secured creditor; & (2)

Any step taken by secured creditor for transfer by way of lease or assignment or sale of assets before

tendering of amount, no further step taken by secured creditor for transfer by way of lease or assignment

or sale of secured assets.”

5. Joint Secured Creditors - In case of joint financing by secured creditors, no secured creditor entitled to

exercise any or all of rights conferred on him Sec 13 unless exercise of right agreed upon by secured

creditors representing ≥ 3/4th in value of amount outstanding.

6. Where dues of secured creditor not fully satisfied with sale proceeds of secured assets, secured creditor file

application in form and manner as to Debts Recovery Tribunal having jurisdiction or competent court as

case may be, for recovery of balance amount from borrower.



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AMENDMENT - 44

Manner and Effect of Takeover of Management – Sec. 15

1. When management of business of borrower is taken over by secured creditor, he appoint as many persons

as thinks fit- (a) which borrower is co. under Co. Act, 2013, to be directors of that borrower as per Act; or

(b) other case, administrator of business of borrower.

2. All persons holding office as directors of co. or administrators deemed to have vacated their offices.

3. Where management of business of borrower, being co. taken over by secured creditor, then,

notwithstanding anything contained, such borrower- in Act or MoA or AoA of such co. – (a) not be lawful

for shareholders of co. or any other person to nominate or appoint to be director Co.; (b) no resolution

passed at meeting of shareholders given effect unless approved by secured creditor; (c) no proceeding for

winding up of such co. or for appointment of receiver in respect thereof lie in any court, except with

consent of secured creditor.

4. Secured creditor under obligation to restore management of business of borrower, on realisation of his

debt in full, in case of takeover of management of business of borrower by such secured creditor.

“Provided that if secured creditor jointly with other secured creditors or any asset reconstruction co. or

financial institution or other assignee converted part of debt into shares of borrower co. & thereby

acquired controlling interest in borrower co., such secured creditors not liable to restore management of

bus. to borrower

AMENDMENT - 45

Application against measures to recover secured debts (Sec. 17)

Any person aggrieved by any of measures u/s 13 taken by secured creditor or his authorised officer under this Chapter, prefer appeal to Debts Recovery Tribunal having jurisdiction in matter ≤ 45 days from date on which such taken. If appeal preferred by borrower, such appeal not entertained by Debts Recovery Tribunal unless borrower deposited with Debts Recovery Tribunal 75% of amount claimed in Sec. 13. Debts Recovery Tribunal, waive or reduce this amount deposited, reasons recorded in writing,

(1A) Application under sub-sec. (1) f iled before Debts Recovery Tribunal within local limits of whose jurisdiction— (a) cause of action, wholly or in part, arises; (b) secured asset is located; or (c) branch or any other office of bank or financial institution maintaining account in which debt claimed outstanding for time being.;

(2) For sub-sec. (3), following sub-sec. substituted, namely-

(3) If, Debts Recovery Tribunal, after examining facts & circumstances of case & evidence produced by parties, comes to conclusion that any of measures u/s sec. 13(4), taken by secured creditor not as per provisions of this Act & rules made thereunder, & require restoration of management/of possession, of secured assets to borrower/other aggrieved person, by order,— (a) declare recourse to any ≥ 1 measures u/s 13(4) taken by secured creditor as invalid; & (b) restore possession of secured assets/management of secured assets to borrower or other aggrieved person, who made application and (c) pass such other direction as consider appropriate & necessary to any of recourse taken by secured creditor u/s 13(4).



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(4) If, Debts Recovery Tribunal declares recourse taken by a secured creditor u/s 13(4) is in accordance with, the provisions of this Act & in rules made thereunder, then notwithstanding

anything contained in any other law for time being in force, the secured creditor shall be entitled

to take recourse to one or more of measures specified u/s 13(4) to recover his secured debt.

“(4A) Where—(i) person, in application claims any tenancy or leasehold rights upon secured asset, Debt Recovery Tribunal, after examining facts of case & evidence produced by parties in relation to such claims for purposes of enforcement of security interest, have jurisdiction to examine whether lease or tenancy,—

(a) expired or stood determined; or (b) contrary to section 65A of Transfer of Property Act, 1882 or (c) contrary

to terms of mortgage; or (d) created after tissuance of notice of default & demand by Bank u/s 13(2) of Act; and Debt Recovery Tribunal satisfied that tenancy right or leasehold rights claimed in secured asset falls

under the sub-clause (a)/(b)/(c)/ (d)/ (i), then notwithstanding anything to contrary contained in any other law for time being in force, Debt Recovery Tribunal pass such order as it deems in accordance with provisions of Act.”.

AMENDMENT - 46

SEC. 19 - RIGHT OF BORROWER TO RECEIVE COMPENSATION AND COSTS IN CERTAIN CASES

If Debts Recovery Tribunal or Court of District Judge, on app. made U/S 17/17A or Appellate Tribunal or High

Court on appeal preferred u/s 18/18A, holds that possession of secured assets by secured creditor not as per

Act & rules & directs secured creditors to return secured assets to “concerned borrowers or other aggrieved

person, who filed app. u/s 17 /17A /18/ 18A, , borrower or other person” entitled to payment of such

compensation & costs determined by Tribunal or Court of District Judge/ Appellate Tribunal or High Court.

AMENDMENT - 47

INSERTION OF NEW SECTIONS 20A AND 20B (Newly inserted section)

(a) Section 20A - Integration of registration systems with Central Registry

(1) CG, for purpose of providing Central database, in consultation with SG or other authorities

operating registration system for recording rights over property or creation, modification or

satisfaction of security interest on property, integrate registration records of such registration

systems with records of Central Registry established u/s 20, in prescribed manner.

Explanation-

registration records includes records of registration under Co. Act, 2013, Registration Act,

1908, Merchant Shipping Act, 1958, Motor Vehicles Act, 1988, Patents Act, 1970, Designs Act,

2000 or other records under other law in force.

(2) CG after integration of records of various registration systems referred to in sub-sec. (1) with

Central Registry, by notification, declare date of integration of registration systems & date

from which such integrated records available; & with effect from date, security interests

over properties which registered under registration system referred to in sub-sec. (1) deemed

to be registered with he Central Registry.

(b) Section 20B - Delegation of powers.

CG by notification, delegate its powers & functions in relation to establishment, operations & regulation of

Central Registry to Reserve Bank, terms & conditions as prescribed.



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AMENDMENT - 48

Filing of transactions of securitisation, reconstruction & creation of security interest (Sec. 23)

(1) Particulars of every such transaction filed with Central Registrar. Provided that Central Registrar

empowered to allow filing of particulars of such transaction or creation of security ≤ 30 days next

following expiry of said period on payment of additional fees ≤ 10 times amount of such fee.

(2) CG by notification, require registration of transaction relating to different types of security interest

created on different kinds of property with Central Registry.

(3) CG by rules, prescribe forms for registration different types of security interest & fee charged.

(4) Further extension by 30 days

AMENDMENT - 49

1. Sec. 26B - Registration of Secured creditors & other creditors

(1) CG by notification, extend provisions of Chapter IV relating to Central Registry to all

creditors other than secured creditors as denied u/s 2(1)(zd), for creation, modification or

satisfaction of security interest over property of borrower for purpose of securing due

repayment of any financial assistance granted by such creditor to borrower.

(2) Any creditor including secured creditor file particulars of trans. of creation, modification or satisfaction of security interest with Central Registry in form & manner prescribed.

(3) Creditor other than secured creditor filing particulars of trans. of creation, modification & satisfaction of security interest over properties created in favour not entitled to exercise right of enforcement of securities.

(4) Every authority or officer of CG or any SG or local authority, entrusted with function of recovery of tax or other Govt. dues & issuing any order for attachment of property of person liable to pay tax or Govt. dues, file with Central Registry attachment order with particulars of assessee & details of tax or Govt. dues from date as notified by CG.

(5) If person, having claim against any borrower, obtains orders for attachment of property from court or other authority empowered to issue attachment order, such person file

particulars of attachment orders with Central Registry in form & manner payment of fee as prescribed.

2. Section 26C - Effect of the registration of transactions, etc.

(1) Without prejudice to provisions of other law any registration of trans. of creation,

modification or satisfaction of security interest by secured creditor or other creditor or

filing of attachment orders deemed to constitute public notice from date & time of f iling of

particulars of transaction with Central Registry for creation, modification or satisfaction of

security interest or attachment order.



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(2) Where security interest or attachment order upon property in favour of secured creditor or

other creditor filed for purpose of registration & claim of secured or other creditor holding

attachment order have priority over subsequent security interest created upon property &

transfer by way of sale/lease/assignment/licence of property or attachment order subsequent

to registration, subject to claim.

Provided nothing apply to transactions carried on by the borrower in ordinary course of

business.

3. Section 26D - Right of enforcement of securities.

Notwithstanding anything in other law, from date of commencement of provisions of this

Chapter, no secured creditor entitled to exercise rights of enforcement of securities under

Chapter III unless security interest created in favour by borrower registered with Central

Registry.

4. Section 26E - Priority to secured creditors.

Notwithstanding anything contained in other law, after registration of security interest, debts due to

secured creditor paid in priority over all other debts & all revenues, taxes, cesses & other rates

payable to CG or SG or local authority.

Explanation-

Clarified that on or after commencement of Insolvency and Bankruptcy Code, 2016, in cases

where insolvency or bankruptcy proceedings pending in respect of secured assets of borrower,

priority to secured creditors in payment of debt subject to provisions of that Code.”

AMENDMENT - 50

Section 27 of the act deals with the penalties

Sec. 27 lays down the penalties as follows - If a default is made - (a) in filing u/s 23, the particulars of every

transaction of any securitisation or asset reconstruction/security interest created by a securitisation Co. or

reconstruction Co. or secured creditors; or (b) in sending u/s 24, the particulars of modification referred to in

that section; or (c) in giving intimation u/s 25, then, every Co. & every officer of Co. or secured creditors &

every officer of secured creditor who is in default shall be punishable with fine which may extend to ` 5,000

per day during which the default continues.

Provided that provisions of this section shall be deemed to have been omitted from the date of coming into

force of provisions of this Chapter & Sec.23 as amended by Enforcement of Security Interest & Recovery of

Debts Laws & Misc. Provisions (Amendment) Act, 2016.



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AMENDMENT - 51

INSERTION OF NEW SECTIONS 30A, 30B, 30C AND 30D (Newly inserted sections)

Section 30A - Power of adjudicating authority to impose penalty

(1) Where asset reconstruction co. or person fails to comply with direction issued by Reserve Bank

adjudicating authority, impose on co. or person in default, penalty ≤ ` 1 Cr. or 2 times of amount

involved where amount quantifiable, whichever is more, & failure continuing, further penalty ≤

` 1 lakh for every day failure continues.

(2) For imposing penalty adjudicating authority serve notice on asset reconstruction co. or person in

default requiring co. or person to show cause why amount specified in notice not be imposed as

penalty & reasonable opportunity of being heard given to person.

(3) Penalty imposed payable ≤ 30 days from date of issue of notice.

(4) Where asset reconstruction co. fails to pay penalty within specified period adjudicating authority

cancel its registration:

Provided that

Opportunity of being heard given to asset reconstruction co. before cancellation of registration.

(5) No complaint filed against person in default in court pertaining to failure in respect of which

penalty imposed & recovered by Reserve Bank under this sec

(6) Where complaint filed against person in default in court having jurisdiction no proceeding for imposition of penalty against that person taken under this sec.

Section 30B - Appeal against penalties

Person in default, aggrieved by order passed u/s 30A(4), ≤ 30 days from date on which order passed, prefer

appeal to Appellate Authority:

Provided that

Appellate Authority entertain appeal after expiry of said period if satisfied that sufficient cause for not filing

it within such period.

Section 30C - Appellate Authority

(1) Central Board of Reserve Bank designate officer or committee of officers as deems fit to exercise

power of Appellate Authority.

(2) Appellate Authority have power to pass order as it deems fit after providing reasonable

opportunity of being heard to person in default.

(3) Appellate Authority, by order stay enforcement of order passed by adjudicating authority u/s

30A, subject to terms & conditions, as deems fit.

(4) Where person in default fails to comply with terms & conditions imposed by order without

reasonable cause, Appellate Authority dismiss appeal.



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Section 30D - Recovery of penalties

(1) Any penalty imposed u/s 30A recovered as “recoverable sum” and payable ≤ 30 days from date on

which notice demanding payment of recoverable sum served upon person in default &, case of

failure of payment by such person within period, Reserve Bank for recovery,—

(a) Debit current account, if any, of person in default maintained with Reserve Bank or by

liquidating securities, held to credit of such person in books of Reserve Bank;

(b) Issue notice to person from whom amount is due to person in default, requiring such person

to deduct from amount payable by him to person in default, amount equivalent to amount of

recoverable sum, & to make payment of amount to Reserve Bank.

(2) Same as otherwise provided in sub-sec. (4), notice issued under sub-sec (1)(b) binding on every

person to whom it is issued, &, where notice issued to post office, bank or insurance co., not

necessary to produce any pass book, deposit receipt, policy or other document for purpose of any

entry or endorsement thereof before payment made.

(3) Claim in respect of amount, arising after date of issue of notice be void

(4) Any person, to whom notice sent, objects to such notice by statement on oath that sum demanded or part thereof not due to person in default or he does not hold money for or account of person default, then nothing in sec. deemed to require, person to pay any sum.

(5) Where it found that statement made by person false in material particulars, such person

personally liable to Reserve Bank to extent of his own liability to person in default on date of

notice, or to extent of recoverable sum payable by person in default to Reserve Bank, less.

(6) RBI, at any time, amend/ revoke any notice/extend time for making payment in pursuance of

notice.

(7) RBI grant receipt for any amount paid to it in compliance with notice issued & person so paying

fully discharged from liability to person in default to extent of amount paid.

(8) Any person discharging any liability to person in default after receipt of notice personally liable

to Reserve Bank—(1) extent of his own liability to person in default so discharged; or (b) extent

of recoverable sum payable by person in default to Reserve Bank, less.

(9) Where person to whom notice sent, fails to make payment to Reserve Bank, deemed to be person

in default in respect of amount specified in notice & action or proceedings taken or instituted

against him for realisation of amount in manner provided.

(10) Reserve Bank enforce recovery of recoverable sum through principal civil court having

jurisdiction in area where registered office or head office or principal place of business of

person in default or usual place of residence of person situated as if notice issued by Reserve

Bank decree of Court.

(11) No recovery enforced, except on app. made to principal civil court by officer of Reserve Bank

authorised in behalf certifying that person in default failed to pay recoverable sum.



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AMENDMENT - 52

Provisions of the Act Not To Apply in Some Cases – Sec. 31

(a) lien on any goods, money or security given by or under Indian Contract Act, 1872 or Sale of Goods Act, 1930 or other law in force;

(b) pledge of movables within meaning of sec. 172 of Indian Contract Act, 1872; creation of any security in any aircraft;

(c) creation of security interest in any vessels,

(d) any conditional sale, hire-purchase or lease or other contract in which no security interest created;

(e) omitted

(f) any rights of unpaid seller under Sale of Goods Act, 1930;

(g) any properties not liable to attachment or sale under first proviso to sec. 60 (1) of Code of Civil Procedure, 1908;

(h) any security interest for securing repayment of any financial asset ≤ `1,00,000;

(i) any security interest created in agricultural land;

(j) any case in which amount due < 20% of principal amount & interest thereon.

AMENDMENT - 53

Power to exempt a classes of Banks or Financial Institutions - Section 31A

(1) CG may, by notification in public interest, direct that any of provision of this act, - (a) Shall not apply to

such class/classes of banks/fin. institutions: or (b) Shall apply to class/classes of bank/ fin. inst. with such

exceptions, modifications & adaptions as may be specified in notification .

(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each

House of Parliament, while it is in session, for a total period of 30 days, and if, both Houses agree in

disapproving issue of notification/both Houses agree in making any modification in notification, the

notification shall not be issued/be issued only in such modified form as may be agreed upon by both

Houses.

(3) In reckoning period of 30 days referred in 31A(2), no account be taken of any period during which House

referred in 31A (2) is prorogued/adjourned for > 4 consecutive days.

(4) Copies of every notification issued under this section shall, as soon as may be after it has been issued, be

laid before each House of Parliament.



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AMENDMENT - 54

Sec. 32 - Protection of Action Taken in Good Faith

No suit, prosecution or other legal proceedings lie against Reserve Bank or Central Registry or secured

creditor or any of its officers for anything done or omitted to done in good faith

AMENDMENT - 55

Sec. 38 - Power of CG to make Rules

(1) In particular, & without prejudice to generality of foregoing power, rules provide for all or any of

following matters, -

(a) Other business or commercial rights of similar nature u/s 2(f).

(aa) form & manner in which application filed u/s13(10); (b) manner in which rights of secured creditor

exercised by ≥ 1 of officers u/s 13(12);

(ba) fee for making application to Debts. Recovery Tribunal u/s 17(1);

(bb) form of making app. to Appellate Tribunal u/s 17(6);

(bc) fee for preferring appeal to Appellate Tribunal u/s 18(1);

(bca) manner of integration of records of various registration systems with records of Central Registry u/s

20A(1);

(bcb) terms & conditions of delegation of powers by CG to Reserve Bank u/s 20B;

(c) safeguards subject to which records kept u/s 22(2);

(d) manner in which particulars of every transaction of securitisation filed u/s 23 & fee for filing trans.;

(da) form for registration of different types of security interests & fee thereof u/s 23(3);

(e) fee for inspecting particulars of transactions kept u/s 22 & entered in Central Register u/s 26(1);

(f) fee for inspecting Central Register maintained in electronic form u/s 26(2);

(fa) form & manner for filing particulars of transactions u/s 26B(2);

(fb) form & manner of filing attachment orders with Central Registry & date u/s 26B(4);

(fc) Form & Manner of filing particulars of attachment order with Central Registry & fee u/s 26B(5)

(g) other matter which required or, prescribed, in respect of which provision made by rules.



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AMENDMENT - 56

Right of action in case of joint financing of a financial asset [Section 13(9)]

Subject to the provisions of the Insolvency and Bankruptcy Code 2016, in the case of financing of a financial

asset by more than one secured creditors/joint financing of a financial asset by secured creditors, no secured

creditor shall be entitled to exercise any right conferred on him u/s 13(4), unless exercise of such right is

agreed upon by the secured creditors representing ≥ 60% in value of amount outstanding, and such action

shall be binding on all the secured creditors.

AMENDMENT - 57

Appeal to AT - Section 25 & 26

i.)Appeal to the AT (established u/s 12 (1) of Smugglers & foreign exchange manipulators (forfeiture of

property Act 1976 shall be AT for hearing appeals against Adj. auth. & other authorities under this Act)

within 45 days from the date on which a copy of the order made is received. ii.)Appeal after the expiry of the

said period, if it is satisfied that there's sufficient cause for not filing it within that period. iii.)Giving the parties

to the appeal an opportunity of being heard. iv.) Dispose of the appeal finally within 6 months. v.)AT shall

send a copy of every order to parties to the appeal & AA or the Director

AMENDMENT – 58

Sec. 27, 28, 30, 31, 32, 33 & 34 of the principal Act, shall be Omitted

CHAPTER 26 - The Prevention of Money Laundering Act, 2002

ca final law amendments may’18|1 ca - final law … · (j) such other matters as may be...

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